Whenever we approach the end of a year, I like to take stock of the previous 12 months and crystallise my thoughts about what the coming 12 may look like, and what I can do to make them better. This ritual seems more important than ever given the state of the world over the past two years.
The previous 12 months, for me, have been rather wonderful in contrast to 2020. I have discovered a newfound ability to appreciate the simple things in life, like buying toilet paper when I want to, seeing my parents and, most importantly, going to the pub! These small things have enabled me to exist in a state of contentment — despite the ongoing presence of Covid-19 in the shadows.
Get set for criteria changes, and better service — we hope
The stamp duty holiday and the general busy-ness of the housing market have made work interesting. Admittedly, at points, it got a bit out of hand, hence the time has flown. But I think, for most people who do what we do, 2021 can go down as a good year.
I believe our landlord clients would echo that sentiment. An increase in tenant demand, yield and property values, plus no shock announcements around licensing, regulation and tax, have meant that ‘landlording’ in 2021 was infinitely better than in 2020.
Out to play
But what of 2022? Omicron has suddenly entered our language and we all feel slightly more jittery about next year. Yet I feel 2022 presents some real opportunities for us to support landlords in the buy-to-let (BTL) space.
The pressure of MEES will gain momentum, so brush up on your knowledge as your clients will appreciate it
Many landlords want to buy a new investment property in 2022 and held off in 2021 because of the heat in the market. Many didn’t fancy playing bidding wars, getting gazumped or paying an ‘inflated figure’ because of the stamp duty rush. Whether ‘inflated’ turns out to be right remains to be seen. A quieter 2022 market will bring these guys out to play.
Interest rates will go up next year. Just look at swap rates and the overall trajectory of lenders’ rates. You have an opportunity to get your landlords thinking about their remortgages now, and save them money.
I feel 2022 presents some real opportunities for us to support landlords in the buy-to-let space
Minimum Energy Efficiency Standard (MEES) regulations are also on landlords’ minds. Some are already thinking about how to bring their properties up to the minimum C Energy Performance Certificate. Your role is to talk about this with them.
For example, if your client is remortgaging onto a five-year fixed, do they need to raise funds to cover works to the property now, rather than scramble to find the money later? The pressure of MEES will gain momentum, so brush up on your knowledge as your clients will appreciate it.
More broadly, I think 2022 is going to be a solid, respectable year in the BTL space. Lenders will have to work harder for business, having enjoyed bumper levels this year. Be prepared for criteria changes and, hopefully, an improvement in service.
For most people who do what we do, 2021 can go down as a good year
I expect to see mortgage rates increase and, with lender margins already compressed, the higher cost of funds will be passed onto the borrower almost in its entirety. Landlords will invest cautiously and, once the base rate moves, their focus will turn to remortgaging.
While my outlook remains upbeat, we will have to wait to see the hand that Covid-19 deals us next year.
Jeni Browne is business development director at Mortgages for Business