BTL Mortgage market ripe for disruption says Property Master

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The UK’s first DIGITAL BUY-TO-LET MORTGAGE BROKER Property Master says that in these days of rapid change in all business sectors, with Brexit looming, rising interest rates and the digital economy moving on apace, there’s nowhere more affected by all of this than the property sector.

The housing shortage aside, landlords are being asked to cope with a stack of new regulations, squeezed profit margins though higher taxation, and tougher lending criteria. The ways in which property sales and lettings are conducted and managed are also being severely shaken-up. Social media, digital technology, and new market entrants such as Purplebricks and Emoov are all leading to rapid change and seriously disrupting traditional lettings and estate agency businesses.

Not only that: banking and finance is another industry going through major changes, and as the majority of landlords know only too well, competitive financing is something they desperately need.

The traditional big four, long suspected of operating to their own advantage, are being seriously challenged. Not just from technological change (FinTech) – though these financial behemoths might think this is challenge enough – they are also facing increasing market competition. The challenger banks, alternative funding methods and increasing scrutiny from the competition authorities are all leading to a sea-change in the industry.

Under new rules which roll out from January of next year UK banks will be forced to provide open access to all their customer data to any regulated third party that asks for it.  This move, aimed to create a more competitive marketplace, is known as “Open Banking” and it could over time see the mortgage market unbundled, potentially turning existing lenders into commodity suppliers and leaving behind swathes of traditional brokers.

One new company straddles both these marketplaces – property and banking. The UK’s first digital buy-to-let mortgage broker, Property Master, thinks private landlords could be amongst the first to benefit from these winds of change.  What’s more, Property Master is inviting investor landlords to share in the opportunities these changes present.

Whilst Open Banking offers the potential to disrupt the entire banking marketplace, it may well be in the increasingly professionalised world of the private landlord where the effects are felt first, that’s according to Property Master’s Angus Stewart, Chief Executive, when he says:

“By forcing banks to lift the veil on their customers’ transaction data Open Banking will facilitate the creation of exchanges that will bring together buyers and sellers in the world of finance. In the market in which we operate I can foresee a time when the data about individual landlords’ portfolios together with their credit history is packaged in such a way by companies such as ourselves that individual lenders will be forced to bid for a landlord’s mortgage business so pushing those lenders into the position of being a commodity item.”

Mr Stewart believes there are very good reasons why private landlords may well be early adopters of such technological change:

“The private rental market itself is undergoing a transformation as landlords adapt to a range of regulatory changes and now rising interest rates. Taken together these trends are bringing about a greater professionalisation amongst landlords and an appetite for faster, cheaper funding solutions making the supply of buy-to-let mortgages the next sector of the property market that is ripe for disruption.”

Mr Stewart continued: “To date private landlords have been served by a fragmented marketplace of more than 12,000 traditional brokers typically offering access to a limited panel of lenders.  Our success rests on using technology to match individual landlords funding requirements against the real-time lending criteria of every buy-to-let lender in the market. The new regulatory and technological changes we are now seeing will enable us to improve still further the service we provide.”

The Property Master online comparison portal offers a radical alternative to the traditional buy-to-let broker using sophisticated algorithms to dynamically match buy-to-let landlords funding requirements to over 90 prospective lenders who offer in excess of 2,000 different buy-to-let mortgages.  Since the company launched in May of this year 10,000 landlords have visited its portal.  Those that went on to re-mortgage benefited from a typical saving of more than £1,800 per annum against their current outgoings.

Over time the company plans to offer a range of other products and services also targeting the private rental market making it a true destination site for landlords.

Property Master has already attracted financial backing from a broad range of private investors including a minority stake being taken by LSL Property Services, whose estate and letting agency brands include Your Move and Reeds Rains.

Property Master is now ready for expansion and is about to begin a fundraising round using the crowdfunding site Seedrs.  If you, as a potential investor, would like to learn more about Property Master’s plans and possibly join the company on its journey to transform its part of the property and finance sector, you can register here for early sight of Seedrs posting, before it is opened to the general public.

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