D e a l i n g  w i t h  f i r s t s

When it comes to writing a history of the rise of BTL lending in
the post-credit crunch era, I am hopeful that apart from the
significant contribution made by existing lenders, such as
Precise Mortgages, there will be a small space for an
honourable mention of lenders like Foundation Home Loans
(FHL). Along with other recent start-up BTL lenders, FHL has
been responsible for opening up niche areas of BTL lending
and challenging preconceptions of what represents the 'right
sort' of lending.

Within the context of affordable lending and the importance
placed on ensuring that clients are not over-extending
themselves, it has been standard practice to not only have
clients state their personal income, but also to provide proof. All
of this comes in the face of what, for most, is a commercial
transaction based on the premise that the loan is supported by
the rental income. When we came to the market in February, we
took the then radical view that as the loans we are granting
were indeed to be supported by rental income, there was no
need for applicants to prove their own income from other
sources. If the loan could not be supported by the rental
income (in our case the rental income is thoroughly stress
tested), it would not be written.

This move not only helps landlords grow their portfolios but it
also encourages new landlords to come to the fore, including
those who may be looking for an investment later in life.
This brings me on to first-time landlords. We believe that this is
an area that has been underserved by the industry and it is our
aim to provide facilities that encourage wider participation. After
the fuss caused by the Chancellor's announcement of allowing
pre-pensioners to take their pension pots in a lump sum, there
was much speculation about this newly-found wealth being
targeted at the BTL market (as well as blowing it all on fast
cars and other luxury itemsl). As it turned out, this has not
been the avalanche that the press trumpeted, but it did highlight
the pent-up desire to find new investment opportunities in the
light of such poor returns from normal bank and building
society deposits.

The Budget announcement on withdrawing tax relief at the
higher rate, apart from being an attempt to cool the BTL surge,
also seems to be designed to discourage new participation. I
think it is in the industry's interests to help educate a yet-tocommit
generation of would-be landlords on what can be, even
with the tax changes, a highly rewarding market. As a champion
of the first-time landlord, we want to appeal to advisers to look
again at those clients who are thinking about BTL and
remember that there are lenders who are there to help them
realise their aspirations.

Published by Business Moneyfacts