The Interview… Louisa Sedgwick, managing director, specialist mortgages, HTB

In the latest of our series of interviews with key industry figures, The I spoke to Louisa Sedgwick, managing director, specialist mortgages at HTB about the challenges facing the buy-to-let market, enhancements to the firm’s semi-commercial range, and the implications of the cost of living crisis for the housing market.

Will the holiday let/staycation ‘boom’ continue or could it fall by the wayside now international holidays are back on the agenda?

We certainly don’t anticipate that the holiday let market is likely to fall by the wayside anytime soon. While demand for international travel will undoubtedly be much higher this year compared to 2021, all predictions are that domestic vacations will still be well above pre-pandemic levels.

Pent-up demand remains for overseas holidays but chaotic conditions at many UK airports and the backlog at the Passport Office could well encourage an even greater number of people to think twice and potentially encourage a last last-minute surge in in UK-based holidays

Are landlords actively taking steps to deal with the 2025 EPC deadline or are they delaying their plans? How can brokers help landlords deal with this fast-approaching deadline?

The honest answer is yes and no. A significant number of landlords appear to be dealing with the issue and, for those who have yet to start, we’re playing our part in educating brokers and the wider investor community around the looming deadline. When you consider that 70% of the buy-to-let market has got a worse than ‘C’ EPC rating then there is a lot of work to be done.

We are receiving an increasing number of enquiries from our broker partners who have clients looking to improve the energy efficiency of their properties and this is one reason why we recently launched our Bridge EPC Refurb product, which combines the benefits of a light refurbishment bridging product wrapped in a term loan. It provides the borrower with added benefits if the property achieves an EPC ‘C’ or above rating after six months. 

We have built this product in response to the growing requests from our intermediary partners ensuring they can offer a credible solution to landlords allowing them to focus on getting their properties up to fast-approaching energy efficiency standards. And this will help landlords overcome the live challenges facing the UK’s existing housing stock. 

What do you think growth areas in buy-to-let will be over the next 12 months? What areas are you targeting this year? What are you doing to achieve this?

Following on from the previous question, there are vast numbers of properties which need upgrading, improving and refurbing so they can move up the EPC ratings and it’s vital that product offerings continue to evolve in order to help facilitate a more energy efficient future for our housing stock before it’s too late. Meaning that green mortgages will remain high on the agenda.

In terms of other areas, semi-commercial enquiries have been strong and our ongoing campaign to put the power back into the hands of intermediaries by freeing clients from assured shorthold tenancies (ASTs) has also helped us gain more traction when it comes to short-term lets and holiday lets, areas which continue to experience increased demand and activity levels.

HTB’s buy-to-let proposition isn’t vanilla but then again it isn’t niche either. How would you describe it?

We’re certainly not a niche provider. You could think of it as ‘vanilla with a twist’, perhaps. Generally, there will be a level of complexity with the type of business we write which takes it out of the comfort zone of the more typical high street lenders who automate their decision making processes. So let’s stick with ‘vanilla with a twist’.

Is the make-up of the buy-to-let market still evolving or do you think the proportion of amateur to professional landlords will now stay roughly where it is? 

We have seen a steady reduction in the number of ‘amateur’ landlords in the market over recent years and we expect this to continue, albeit at an increasingly slower rate. Regulation isn’t going anywhere and I don’t see any government making buy-to-let more attractive from a tax perspective for landlords any time soon.

You recently made changes to your semi-commercial lending criteria. What was your thinking behind this move and do you foresee making further changes this year?

We are always listening to feedback from brokers and our recent criteria change was a direct result of that. It means we can lend on an increased number of properties and assets and highlights our appetite to lend in the semi-commercial space. 

Unlike many lenders in this market, we consider the commercial and the residential income for both investment and owner-occupied commercial properties due to our years of expertise and flexible underwriting approach in the specialist arena.

In addition, we have a number of further enhancements to our offering lined up as a result of broker feedback, so watch this space.

How do you see the pandemic and subsequent changes to working patterns affecting the semi-commercial market? 

While those who can work remotely seem keen on maintaining some form of flexibility in their work-life patterns, we’re not talking about death of the office as we know it in any shape or form. Consequently, we don’t see smaller premises being affected too much.

HTB deals with a wide variety of complex assets, including pubs, barbers, betting shops and offices and people seem to have had enough of cutting their own hair and doing jigsaw puzzles.

The market remains busy and, having revised the ratio of commercial to residential to 50:50, we’re finding brokers coming to us with more semi-commercial lending opportunities every day.

How do you see the cost of living crisis and a rising base rate environment materially affecting the mortgage market?

It really is difficult to predict with any certainly but at this present point in time I don’t see any radical drop in activity. It should make borrowers think twice about stretching themselves too much but they should be doing that anyway. 

While interest rates are at relatively low levels they are still high for those who got onto the property ladder after 2008, so I sadly expect to see a slight rise in arrears. I don’t believe the base rate will rise by more than 50 to 75 basis points, despite inflation predicted to top 10%.

Affordability calculations will also need to be continually adjusted to factor in inflationary pressures and this is something we, like every other lender, will closely monitor.

Will we see the housing crisis be solved in any way by the government’s ‘Levelling Up’ plans?

As Secretary of State for Levelling Up, Housing and Communities, Michael Gove has attempted to enact sensible reforms (despite opposition from the Conservative backbenches) but we need clarity around what’s changed as there is still too much confusion through the property sector.

If I’m honest, the bigger issue is whether this government will survive much longer and still be around to enact any of its plans.

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