The issue many lenders now face is managing extremely strong business flows as demand from homebuyers and BTL landlords surges. Since the reopening of the housing market in May, business has exceeded many lenders’ expectations, which were at best muted.

In the BTL market, overall lending was down 11 per cent during the first half of the year, in terms of both volume and value. Considering the ‘lost’ second quarter, this is a remarkable figure. There’s no doubt that a very healthy first quarter masked some of the scarring of the second, but the pick-up in business recorded in the June numbers has continued into the second half of the year.

When one looked at the industry-wide landlord survey from BVA BDRC, landlord sentiment was at its lowest-ever level during March and appetite for new purchases was equally poor. Landlords can be a pessimistic group (you can hardly blame them considering the tax and regulatory changes they’ve had to endure over recent years), but at that point the prospects for new BTL lending looked pretty bleak.

Although it’s too early to say with certainty, the current buoyancy of the market could mean that 2020 ends broadly in line with 2019 in terms of lending volumes; unthinkable in those days when we were all confined to our houses.

Catalyst for business

Ironically, that period could be seen as a catalyst for these strong business levels. The lockdown was a once-in-a-lifetime opportunity to really assess what we wanted from a home, and where we wanted to live. It has spurred many of us to look for alternatives – something new, something different – whether a homeowner or a tenant.

Rightmove recently reported a significant increase in rental searches for postcodes outside traditional commuter belts, as the prospect of fewer days in the office liberalises people from locations within a certain radius of the workplace.

We haven’t necessarily seen that reflected in the types of BTL proposition we are underwriting – urban areas are still ever popular – but it may open new markets for landlords if sentiment turns into behaviour and people look to move further afield for more open space.

Another catalyst for strong business levels is clearly Rishi Sunak’s stamp duty holiday. While this has greater benefit for home purchasers, it’s also proving popular with landlords. Our research of landlords showed that 38 per cent of them were more likely to buy property as a result of the stamp duty holiday, rising to 41 per cent for those with 11 or more properties in their portfolio.

I’d also expect the stamp duty holiday to lead to more landlords moving their property from their own name into limited company status.

As we get nearer the 31 March deadline I’ll be interested to see if the chancellor takes any further action to smooth out the cliff-edge fall that the whole industry may face. If we look at the lessons learned from March 2016 in the BTL market, lenders face a challenge in processing peak business leading up to the deadline and the subsequent quiet months that will invariably follow.

My advice to intermediaries and landlords is to get business in to lenders early and not wait until those first months of the new year when service levels and capacity will be stretched across the market.

Of course, a consequence of strong business levels is the tinkering of products and criteria, and we have seen this across the websites of the trade press as lenders try to manage flows. Our brokers tell us that consistency is important, and that’s what we have tried to achieve since the early days of lockdown. We haven’t tweaked criteria here and there or withdrawn products at short notice. We made our changes early and have tried to stick with those.

Naturally, Paragon – and the wider sector – is not blind to the issues that could be on the horizon. The various government support schemes are coming to an end and we are mindful of how this may affect tenants who occupy our customers’ properties. We are yet to see whether the winter will lead to more local lockdowns; and, of course, Brexit nears ever closer.

But the sector is positive and certainly in a stronger shape than many could have anticipated during those dark days of the early pandemic.

Richard Rowntree is managing director of Paragon Bank