YBS Commercial Mortgages | YBS
YBS Commercial Mortgages has implemented some positive changes to its buy-to-let offering this week, providing much-needed support for landlords.
Following broker feedback, the commercial lender has reduced the stress rate applied to buy-to-let affordability calculations on its commercial buy-to-let products. The positive change effectively increases the volume of lending that can be provided to borrowers. The stress rate has been reduced from 125% Interest Rate Cover (or Interest Cover Ratio - ICR) at pay rate plus 0.30%, to stressing at 125% ICR at pay rate (pay rate is interest rate on the loan). This move recognises the reality faced by UK landlords who face a challenging interest rate environment, as well as ongoing economic headwinds.
These changes are designed to support landlords in areas where rents are lower relative to property value, taking into account the costs faced by landlords. The change will increase what they can borrow, subject to remaining within the lender’s 75% loan-to-value (LTV) criteria. This will enable landlords to borrow more on these properties, freeing up capital to invest, or to undertake property maintenance. For example, for each £1 million of assets, based on a yield of 4% (rental income of £40,000 per year), assuming a five-year fix at 5.60%, landlords will be able to borrow around 5.5% or £30,000 more.
Tom Simpson, managing director of YBS Commercial Mortgages, said: “We understand the role that landlords play in providing much needed, quality rented accommodation, which in the current climate, are in short supply.
“We hope that reducing our stress rate – which is another example of how we continue to respond to broker feedback - will provide the support that their landlord clients need, improving their ability to borrow more in the current, more challenging interest rate environment.
“As a responsible lender, focussed on the importance of high-quality accommodation, these changes will also benefit tenants, as more landlords have access to our product suite.”
ENDS – CMPR03-24
YBS Commercial Mortgages has scooped the title ‘Best Service from a Commercial Mortgage Provider’, for the second year in a row, at the 2024 Business Moneyfacts Awards.
The annual financial awards ceremony is the largest in the UK and celebrates the best in financial services. Finalists and winners are decided through product monitoring along with broker and business community feedback.
Tom Simpson, managing director of YBS Commercial Mortgages, said: “We’re delighted to have been recognised again in this way, especially given the results are decided based on the feedback of the brokers we serve."
"Offering them the best possible service underpins our business and is extremely important to us. To support this, over the past 12 months we’ve undertaken a recruitment drive and expanded our regional teams to provide them with excellent support. Particular focuses have been the launch of our new London Hub, and establishing a dedicated team to support the growth and development of our commercial investment business. We’ve also restructured the sales team, to ensure clients have help from the best person to support their deal through to completion as quickly and smoothly as possible."
"These changes have been underpinned by continuous improvements to our products and propositions - and were all directly inspired by broker feedback. We’ve also passed on the benefit of market fluctuations wherever possible, to provide the ideal mix of choice and value for borrowers. The growth of our balance sheet last year, despite the more challenging market environment, is testament to our success, and there’s much more to come."
"It’s fantastic to receive this award and I’m grateful both to the brokers who supported us and every single member of our team for the part they have played in our achievements to date.”
Piotr Twaits, managing director at Synergy Commercial Finance Group, said: “Congratulations to YBS Commercial Mortgages for winning this well-deserved award. It’s always a pleasure to work with the team, who provide excellent, individually-tailored customer service, alongside great quality products.”
YBS Commercial Mortgages also sponsored the award category ‘Commercial Mortgage Introducer of the Year’. Tom commented: “Congratulations to Watts Commercial Finance for winning this award."
"Our long-standing relationships with our brokers and introducers are fundamental to our business and so important to us, so we’re delighted to support this award - which we’ve done for the last few years - as it really celebrates their dedication and contribution to the sector.”
Tom Simpson, managing director of YBS Commercial Mortgages, discusses the importance – and the challenge - of ensuring good quality homes in the rental market.
The rental sector has had some challenges in the last few years. Government policies, affordability issues and property shortages have all contributed to question marks over what the future of buy-to-let might look like – for both landlords and tenants.
Higher interest rates have heaped financial pressure on many landlords, running the risk of damaging the private rental sector that has evolved over the last two decades – something which, if left unchecked, would only serve to harm not just landlords, but also the tenants they serve.In light of this, many have raised questions about the potential long-term consequences of the Government’s policies and suggested reforms relating to this sector – including those designed to protect tenants from unscrupulous landlords. For me, this has sparked an interesting but very important debate. Namely, how can we ensure the private rental sector is sustainable, and that it remains viable for both reputable investors and their tenants?
Ensuring the right mix
There’s no doubt that there are unintended consequences to well-intended, but poorly-thought-through, tenant protection reforms. It is all about striking a balance and understanding the consequences of these in both the short and longer term. For example, whilst we must accept that protecting the rights of tenants is important, landlords too need to feel in control of their assets and have the freedom to make changes required to maintain the viability of their offering, which, after all, is in critically short supply.
The fact is that there has been a succession of changes in the buy-to-let market over recent years which have, arguably, made being a landlord less palatable. These include adjustments to taxation and the introduction of rent controls in Scotland. In other areas, there is uncertainty within the industry - such as with regards to the scope and timing of EPC requirements for rental properties, following previously proposed reforms being placed on hold, coupled with the upcoming election.I believe the blanket demonisation of landlords misses the point, which is the vital contribution reputable landlords make to the housing market machine – both in terms of making up the shortfall of quality homes for those who cannot or do not wish to buy, and offering a spring-board into homeownership for future first-time buyers. The Home Truths report published by Yorkshire Building Society last year can attest to the impact all of this is having on landlord sentiment – of those asked, 61%* said that being a landlord is less attractive now than it was in the past.
One of the most serious potential outcomes of changes which make landlords feel this way is what I could best describe as a 'race to the bottom'. We could see better-quality landlords exit the market, which would then become increasingly 'cost led' – in turn creating incentives for corners to be cut, leading to poorer quality, less safe accommodation and a rise in measures designed to extract greater yield from property, such as predatory ground rent practices, for example.
This brings into sharp focus the need for more strategic thinking around protections for tenants, covering vital factors like fire safety, accommodation standards and deposit protection, to prevent the scenario described above from becoming a reality. This should take the form of a long-term ‘joined-up’ strategy to promote a private rental sector that is viable for both reputable investors and tenants. Energy efficiency also has an important role to play here – as inefficient buildings increase energy bills for tenants.
Why it matters
That’s why we’ve committed to the Decent Homes Standard – a formalisation of what we’re already doing to ensure the rental properties we lend on are of a high quality. This will ensure any properties we lend on meet clear criteria, according to a framework through which we determine what good quality properties look like. This includes ensuring the property meets the statutory minimum standard for housing (such as not being affected by damp or mould growth); is in a reasonable state of repair (for example, having windows and doors which are watertight and secure); and has reasonable facilities (for example, a modern kitchen).
These standards are crucial, and landlords themselves agree that legislation to protect tenants is a good thing, with 63% of those surveyed for Home Truths stating that such measures were positive for landlords*.
Collaboration is key
There are already further government policies in train designed to support tenants, such as the pending legislation to prevent no-fault evictions. However, what we really need is a wider package of reforms which achieve that sweet spot of supporting quality landlords and improving conditions for tenants on a long-term, ongoing basis.
Recognising and acting upon this could be fundamental to the future of the sector, for everyone who plays a part in it.
* From Yorkshire Building Society’s Home Truths report, based on a survey of 500 landlords conducted with Opinium, April 2023.
YBS Commercial Mortgages has implemented some changes to its sales team this week, as part of its ambitious growth strategy with broker and client support at its heart.
The commercial lender has taken the decision to create a new London Hub, with a new regional director at its helm, supported by a new team of relationship directors - who have been deployed from existing internal teams. The new hub will have a business development focus at its core, with the aim of building a strong presence in the London area.
Recruitment for the role of regional director is now complete, with Andrew Edwards, an internal candidate, taking on the position, which is based at the Yorkshire Building Society Kensington branch, on Kensington High Street.
Andrew, who is currently regional lead for the South-East team, commented: “I’m really looking forward to taking our products and propositions to even more brokers and customers across the London area and adding even more value to the business.”
Andrew will be working closely with other team members of the new London hub, including senior relationship directors Mark Setchell and Gaynor Morgan; and relationship director Dan Sloman.
Tom Simpson, managing director for YBS Commercial Mortgages, said: “As a lender who can operate in any part of England and Wales, a nationwide presence is vital. London is a crucial market, and we’re thrilled that we’re now able to execute our plans to build out our presence in the region."
"That’s why I’m delighted that Andrew has accepted the role of regional director for the London hub. This is another great example of supporting and promoting internal colleagues, and I wish Andrew all the best as he embraces his new role, growing our distribution reach in this area, in line with our strategic ambitions as a business."
"As a strong, stable lending partner, we’re focussed on providing a dedicated personal service to all our brokers and their clients, wherever they are based. This move will enable us to strengthen our offering in the commercial market.”