"With the prospect of real income falling as inflation kicks in, first time buyer affordability will become more stretched, leaving the private rental sector to bridge the gap in the demand for housing."
FR: What changes has Kent Reliance seen in 2016, and do you have any exciting news or upcoming plans over the next 12 months?
2016 was truly a year of change, and presented uncertainty for landlords, brokers and lenders alike. We’ve seen new regulation and a new tax regime, all within a period of turbulent macro-economic conditions. The market responded well through quick and responsive lending, coupled with many landlords choosing to manage their portfolios through limited companies. This meant the market saw a record number of transactions ahead of April’s stamp duty deadline at the start of the year, and after a post stamp duty lull, we saw landlord confidence rebound to end the year on a high.
As we start 2017, we are already preparing for the triggering of Article 50, changes to mortgage interest tax relief and the new PRA underwriting standards. Kent Reliance will also grow its distribution network and expand its sales team, giving our broker partners greater access to the new products and services we will be adding to enhance our existing offering.
FR: How will new regulations continue to affect the buy-to-let market in 2017, and how can lenders and landlords combat tightened affordability rules?
The changes already witnessed in 2016 will continue to have a ripple effect on rents, while the new stamp duty levy, the removal of mortgage interest tax relief and the ban on letting fees all have the potential to drive up running costs for landlords which many will choose to pass on to tenants.
On top of this, with the prospect of real income falling as inflation kicks in, first time buyer affordability will become more stretched, leaving the private rental sector to bridge the gap in the demand for housing.
The new affordability rules have undoubtedly affected brokers and lenders alike, and have made home-ownership more difficult for non-standard borrowers. Nevertheless, lenders need to continue to support brokers in providing them with the solutions that meet the need of their customers. Our relationships and open channels for communication with brokers is paramount in shaping our offering and we work closely with our partners to provide the highest level of service. Innovation will be crucial in 2017.
FR: Do you foresee the supply and demand issue getting worse? What more can be done to ensure that people continue to have access to the mortgage market?
As demand continues to outstrip supply, we predict rental growth will accelerate to at least 3% by the end of 2017, slightly ahead of the inflation forecast. We hope the government’s Housing White Paper, expected imminently, will offer remedies to the ongoing crisis, and meet the concerns of all stakeholders in the housing market.
UK housing policy must be supported by sustainable, sensible lending – a worthy goal of PRA’s consultation. However the cumulative effect of the political and regulatory changes could well dampen the market more than intended. Any move that slows the widening of supply poses a risk to the long term improvement of the housing market.
FR: How do you see the complex lending market evolving and what more can be done to help non-standard borrowers?
Quality specialist lenders will come to the fore, and brokers are able to distinguish between those that talk a good game and those that really understand the specialist needs of their clients will come out on top. The successful ones will be the ones who are able to provide their broker partners with specialist knowledge and product offering while operating in the way mainstream lenders do, in terms of capability and service.
It is through its dedication to working closely with broker partners that Kent Reliance has enabled brokers across the country to provide their clients with the specialist products they require.
FR: If you could see one headline about financial services in 2017, what would it be?
“Housebuilding reaches all-time high as government delivers radical housing policy”.
