Opportunity knocks for BTL at investor show
27 April 2012
As the buy-to-let (BTL) market shows little sign of slowing down and lenders
continue to announce products to cater for the property investor, finance
professionals in the short term sector can now find growing opportunities
within this niche.
With this in mind B&C attended the Property Investor Show 2012, held at London's
ExCel centre on April 19 and 20, to get a closer look into the world of
property investment and to find out how brokers may be able to maximise their
presence within this market sector.
Offering context for the show and setting the scene for the current BTL marketplace, an
afternoon seminar conducted by Richard Bowser, Editor of Property
Investor News, on April 20, ‘Opportunity Knocks', explained how today's
investors can usually be classified into three categories: the passive investor
who may have acquired a property accidently through inheritance; the committed
investor who may have one or two units but their investments do not provide
their primary income; and landlords who invest professionally with a wide
portfolio of properties and who are usually part of the National Landlords
Observations on the current BTL market suggest innovative areas where brokers may encounter the kinds of individuals who require their services. In the past ten years, the
number of professional investors has grown significantly with these individuals
becoming more entrepreneurial by partaking in associated activities like
property fund investment, establishing their own letting agencies or running
property specific events.
Whilst these areas may be providing more opportunity for brokers, the seminar also
highlighted that the BTL market is evolving and areas previously considered
most lucrative are being re-addressed by new regulations. A salient
consideration is a restriction now in place affecting those investing within
student property which gives Local Authorities new powers to curtail a high
concentration of student housing in specific areas, ultimately adversely
affecting investor opportunities in this sector of the market.
Alternative areas of investment must therefore be identified in order for this sector to
keep growing at its current pace. The seminar encouraged investors to seize new
opportunities on the high street following the demise of many businesses by
developing commercial property to mixed use.
However, the biggest threat to such professionals is still the restricted availability
of funding for any investment project. We spoke to some of the lenders who
exhibited at the show to get an idea of the kinds of enquiries they received
from the room.
Stephen Lerman, Regional Development Manager at unregulated and privately funded lender
Auction Finance, told us that they found the show particularly useful as it
holds a private auction of its own. He said: "We've received a varied number of
enquiries from individuals looking to purchase investment property - we
specialise in essentially offering flexible bridging finance which can be used
in a number of circumstances, such as auctions."
Stephen also explained how, as auction finance providers, the company can facilitate an
investor's portfolio expansion by allowing them to take on more properties than
they originally thought possible: "A common use for the kind of bridging loan
we provide is, for example, in circumstances where a buyer intends to put in a
bid for one lot at auction with a deposit secured prior to the sale, however,
once at the auction he instead purchases two slightly cheaper properties. In
this instance, the initial deposit originally intended to purchase the one
property would be split between the two cheaper properties. We can provide a
bridging loan to provide the additional funding - we can lend up to 70 per cent
of the sale price, not the open market value which gives even more benefit."
Another lender exhibiting at the show, Willi Thompson of High Street Boutique Finance,
contributed to the overall positive response to the show. He said: "This is our
first time exhibiting here - we've previously exhibited at the Mortgage
Business Expo some years ago and although the Property Investor Show is
quieter, it has provided sufficient activity to get good leads - we'll really
be able to analyse the success after the show by the kinds of deals we complete
in the weeks ahead.
"The majority of enquiries we have received are from buy-to-let investors but on the
whole there has been a real mixed bag of individuals, from first time buyers
and those with one or two properties already to the well-seasoned pros."
We also visited the Royal Institute of Chartered Surveyors (RICS) stand and spoke
to one of its representatives, Katie Kinsella, who told us about the feedback
from the visitors to their stand: "For the most part, we have experienced
investors enquiring about the relevant surveys needed when purchasing a
property for commercial or residential purposes.
"There are Chartered Surveyors in the room from RICS who are actively giving technical
advice and specialist knowledge of the market as well as recommending quality
surveyors in their area."
Katie also told us that other sectors of the market are looking to get involved in
the organisation. She observed: "We've noticed a rise in enquiries from estate
agents who are looking to become RICS members - by affiliating themselves with
an association body it provides them with a code of conduct to work towards."
With events like the Property Investor Show attempting to scratch the surface of the
issues that really concern the investor community, it seems clear that, if
brokers take the time to do their due diligence properly, they really can tap into the property investor market and complete some diverse
and worthwhile enquiries.