Despite the frustrations there have been some positive outcomes from the pandemic, such as the stamp duty holiday, which produced a welcome boost to the housing market, including a surge in BTL purchases. However, this sudden uplift in business has caused its own difficulties for service providers, with some lenders struggling to maintain acceptable service levels.

With the deadline of 31 March looming for those seeking to take advantage of the stamp duty holiday, there are concerns in the industry that having a hard cut-off point may cause some purchase transactions to fail if they don’t complete in time. For example, prospective first-time buyers may not have enough savings to cover the 3 per cent stamp duty charge if it suddenly becomes payable when they are due to exchange contracts on their new home.

There have been calls for the deadline to be extended and a tapering-off period to be introduced to maintain buoyancy in the market beyond 31 March. It would also release the pressure on all parties involved in the property purchase process and prevent a cliff-edge scenario for existing applications. What this space.

Online improvements

On the upside, 2020 highlighted the need to improve online services from lenders and intermediaries in order to meet the changing demands of their customers. This has included the development of enhanced online submission processes, new web-based tools to help customers on their journey, and the widespread use of digital communications such as Zoom or Teams meetings to build and maintain relationships.

There have been winners too, with the holiday-let sector experiencing an unexpected boost as a growing number of people have opted for staycations in the UK, bringing an increased demand for properties in popular resorts and other attractive locations. At TBMC we have experienced a surge in enquiries about holiday-let finance; and, while the Covid-19 vaccination programme has begun in the UK and people are starting to feel more confident about the future, 2021 is likely to see large numbers still opting to spend their vacations closer to home.

The demand for limited company finance remained strong during 2020, which is to be expected because the mortgage interest tax relief for BTL properties was finally phased out in April. At TBMC, a high proportion of applications are via a corporate entity and this trend is expected to continue in 2021.

A recent report by Hamptons showed that there had been a record number of new incorporations set up for the purpose of holding BTL properties. There was a total of 41,700 BTL incorporations in 2020, which is an increase of 23 per cent compared with 2019. Hamptons estimates that around half of all BTL properties are now being held in a limited company compared with close to one in five in 2016.

It is likely that the challenges arising from Covid-19 last year will still be relevant in the first half of 2021, so those working in the complex BTL sector and the wider mortgage market will have to remain focused on navigating this unusual set of circumstances and delivering the best service possible.

At TBMC we have a free BTL sourcing system with an integrated online application form, which has recently been upgraded to include an online declaration and document upload facility to improve our processing efficiency for landlord customers.

We are also focused on improving communications between lenders, intermediaries and landlords while we all face this situation together. This not only includes providing transparency about service levels, but also means demonstrating a level of empathy for BTL investors who have had their own set of challenges during the pandemic.

Many landlords have faced difficulties with payment of rent, and others, with more specialist property investments such as houses of multiple occupation and student lets, have sometimes struggled to secure the finance they needed.

The BTL mortgage market is recovering well, though, and the choice of lenders and products available to service the diverse requirements of UK landlords is continuing to improve, so the sector looks set for a better year ahead.