There was a significant rise in Agreements In Principle for two to five year buy-to-let products at Octopus Property during the last quarter of 2016.
During the last three months of the year, Octopus Property issued 233 Agreements In Principle, in comparison to 108 at the same period in 2015. This was a rise of 115%.
On the 1st January 2017, the Prudential Regulation Authority’s new affordability regulations brought increased stress-testing and alterations to underwriting requirements.
As such, this has introduced more difficulties for non-standard borrowers, such as accidental landlords, foreign nationals and company applications. Octopus Property specialises in these regions and has therefore seen a rise in business.
The increase in buy-to-let products assisted a rise in Agreements in Principle as a whole in 2016. The firm issued 2405 Agreements in Principle in 2016, compared to 1656 in 2015.
Mario Berti, CEO of Octopus Property, observed: ‘The buy-to-let sector has changed fundamentally over the past year or two. Alongside the raft of tax changes, financing for landlords has become considerably more challenging. This is almost certainly the reason for the surge in demand for our buy-to-let products in the latter stages of 2016 and early days of 2017. We cater for buy-to-let borrowers with less conventional circumstances that need more bespoke underwriting and for whom the high street has become a more difficult place to borrow, all the more so since the new regulations came into force on 1 January. It’s in this type of conservative lending climate that specialist lenders like ourselves can outperform.’