As we approach the end of a year, I like to take stock of the past 12 months and crystallize my thoughts on what the next 12 might look like and what I can do to improve them. This ritual seems more important than ever given the state of the world over the past two years.
The last 12 months, for me, have been rather wonderful compared to 2020. I have discovered a new ability to appreciate the simple things in life, like buying toilet paper when I want, seeing my parents and, most importantly, going. at the bar! These little things have allowed me to exist in a state of contentment – despite the continued presence of Covid-19 in the shadows.
Get ready for criteria changes and better service – we hope
The stamp duty holiday and general housing market activity made the job interesting. Admittedly, at times it got a bit slippery, so time went by. But I think for most of the people who do what we do, 2021 can be a good year.
I believe our owner clients would echo this sentiment. An increase in tenant demand, yield and property values, along with shock-free announcements about licensing, regulation and taxes, meant that ‘ownership’ in 2021 was infinitely better than in 2020.
Go out to play
But what about 2022? Omicron has suddenly entered our language and we all feel a little more nervous about the next year. Still, I think 2022 presents real opportunities for us to support homeowners in the buy-to-lease (BTL) arena.
The pressure from MEES will intensify, so sharpen your knowledge because your customers will appreciate it.
Many owners want to buy a new investment property in 2022 and put it on hold in 2021 due to the heat of the market. Many did not want to play bidding wars, stand out, or pay an “inflated number” because of the stamp duty rush. It remains to be seen whether “inflated” turns out to be correct. A quieter market in 2022 will get these guys to gamble.
Interest rates will rise next year. Just look at the swap rates and the overall lender rate trajectory. You have the ability to get your homeowners to think about their remortgage now and save them money.
I think 2022 presents real opportunities for us to support owners in the rental space
Minimum energy efficiency standards (MEES) regulations are also on the minds of homeowners. Some are already thinking about setting up the minimum C Energy Performance Certificate. Your role is to talk to them about it.
For example, if your client is re-mortgaging over a fixed five-year period, does he need to raise money to cover the work on the property now, rather than scrambling to find the money later? The pressure from MEES will intensify, so sharpen your knowledge as your customers will appreciate it.
More generally, I think 2022 will be a solid and respectable year in the BTL space. Lenders will have to work harder for business, having enjoyed record levels this year. Be prepared for changes in criteria and hopefully improved service.
For most of the people who do what we do, 2021 can be a good year
I expect mortgage rates to rise and, with lender margins already squeezed, the higher cost of funds will be passed on almost entirely to the borrower. Homeowners will invest prudently, and once the base rate changes, their attention will turn to refinancing.
While my outlook remains optimistic, we’ll have to wait and see the hand Covid-19 gives us next year.
Jeni Browne is Director of Business Development at Mortgages for Business