Unencumbered rental properties present a big opportunity for brokers to grow their buy-to-let (BTL) business, according to the latest video released by Brightstar Financial.
The video features Sam Debenham, senior business development manager at Paragon Bank, speaking to Andrew Cappaert, group head of national accounts at the Brightstar Group, about the current challenges and opportunities in BTL.
Speaking about unencumbered properties, Debenham said: “Roughly 63% of private rental sector properties are unencumbered.
“That doesn’t mean that all 63% are going to refinance their portfolio to buy new properties, but there is a huge opportunity here for those landlords who are looking to acquire more stock.”
The pair also talked about the trend for landlords to reassess and restructure their portfolio to deliver bigger yields.
Debenham highlighted that some landlords are analysing their portfolios and looking at the investment property they hold to see where they could make improvements, targeting higher yielding properties.
He added: “Houses in multiple occupation [HMOs] are the obvious example.
“There’s an old-fashioned perception of them being big ugly buildings and not very nice places to live but week in week out, we see some fantastic HMOs – really high-quality properties.
“Landlords are trying to be creative when looking at HMO conversions to ensure they attract the highest possible rent.”
He continued: “Another strategy is to target properties that need improvement, which can provide capital appreciation as well as increased rent.
“Semi commercial properties offer another option – and considering whether they rent it out as it is or convert to residential dwellings. So, there are lots of options for landlords.”
During the video, the pair also discussed the growing trend of product transfers in buy-to-let.
Debenham highlighted that over the past year, he has heard more about product switches and the number of brokers who are involved in product switches.
He added: “Half of our product switches last year were done by brokers, and of those, 41% were done by different intermediaries, which is really surprising.”
Cappaert said: “We find that across the board. There is so much opportunity for brokers to just keep their relationship going with their client.
“A lender will always contact the client when it comes to a product switch, so we are encouraging intermediaries to keep in contact. It’s surprising that people let that go. It’s low hanging fruit.”
