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Steve Hanbury sat down with our Head of Bridging and Development Finance – Morgan Bowker

We were delighted to return and exhibit our services to professional landlords and investors at the ultimate landlord networking event

The latest event was held at Old Billingsgate London on the 5th July.

Our Head of Bridging and Development Finance Morgan Bowker sat down with Steve Hanbury - Director of the National Landlord Investment Show, they discussed latest changes in the marketplace, EPC regulation updates, and potential opportunities for property investors.

The transcript of this conversation can be found below -

Steve (00:11):

Hi, my name is Steve Hanbury of the National Landlord Investment Show. Today I'm at our show in Old Billingsgate in London, and what a terrific venue, a terrific sunny day we've had and delighted to be joined by Morgan Bowker of Vincent Burch Mortgage Services. Welcome Morgan.

Morgan (00:28):

Thank you for having me Steve.

Steve (00:29):

Pleasure having you. So how do you find lenders pricing currently in the specialist market?

Morgan (00:38):

There’s been quite a lot of changes in the last few weeks. It's been a Rocky ride let's say, with the swap rates that is, which is how most of the lenders price their lending and these have changed quite dramatically. To put this in perspective a year ago, the interest rates were at 0.5%. They're now over 3%. So for five year borrowing and even more actually for two year borrowing, which has caused a lot of the specialist lenders to come out of the two year market altogether. So when people are looking for short term borrowing for two years, it's not available. So we are looking at five year fixed mainly. And obviously if you're thinking the interest rates for the borrowing alone is three and a half percent for the lenders, their going to have to put quite a margin on it at the moment to make it worthwhile for them. So yes that's where the interest rates are in the specialist market at the moment, in comparison to perhaps what clients were used to a year or so ago.

Steve (01:36):

In terms of EPC requirements, how are these requirements affecting the mortgage market?

Morgan (01:44):

Well, there's a few specialist products out there for landlords whose properties are EPC rating C or above. So they are getting slightly better interest rates and products, not a huge amount, but there is a better rate for them - the headline rates that clients are seeing. There's a lot of changes with the EPC ratings at the moment, recent surveys suggest only one in four properties on the Buy to Let market, the landlords, the properties that they own are actually meeting the current minimum requirements of an E. That's currently what the government have put in as the minimum - an E rating, but that is actually going up to a C rating by 2025. Also the costs currently landlords are expected to spend to raise the EPC rating of a property is £3,500 but this will actually be increasing to £10,000.

Morgan (02:39):

So people are going to have to start forward thinking that actually they need to increase their EPC ratings, get the homes more energy efficient to actually be making sure it's the right thing for the environment and also their tenants. So what I'm kind of doing at the moment in the same way that we did for landlords, HMO, landlords with their licensing, making sure that they're forward thinking about it now, budgeting for it, bringing their homes up to standard, to make sure that they're ready for in a few years time. I think there will be a big push from the lenders to make sure that they are actually the right EPC ratings and they are more energy efficient.

Steve (03:15):

We had actually a fantastic HMO panel debate and the room was absolutely packed in the main auditorium today. So that was really good. So commercial to residential bridging is commonly sort of searched more than just residential bridging. Why is this?

Morgan (03:33):

Yes, well I think coming out with the post pandemic world, I think a lot of people are still working from home. There are a lot of empty office buildings where they're just not being used. So investors are looking at purchasing these, turning these into flats. Central city locations are quite desirable for students, and young working people looking for affordable properties in the city center. But I do think it's more suited to a seasoned developer. So they've done it a few times because it's something that a lot of landlords don't necessarily realize that you need to make sure you've got planning permission, a change of use, a lot of the time new build warranties need to be in place because it's technically a new build - because it's the first time it's been lived in as it stands, and also building regulations. I've seen unfortunately a few cases where clients weren't aware of it and it's caused issues further down the line. So it's making sure that you understand all those facets of the journey in that but yes, it's definitely happening a lot more

Steve (04:33):

Brilliant Morgan. So final question how are you at Vincent Burch Mortgage Services helping with this?

Morgan (04:42):

So everything really from helping clients purchase potentially a sort of rundown property where the EPC rating needs to be improved, renovate it, bring it up to standard and take out as much of their investment as possible. Get it back out on the saleable market or the rental market. Also securing development finance to look at converting these commercial units into self- contain flats or multi-use properties and helping them grow and develop their portfolio of properties.

Steve (05:14):

Thank you, Morgan. Pleasure speaking with you today. So my name's Steve Hanbury at the National Land Investment Show, and I've been joined by Morgan Bowker of Vincent Burch Mortgage Services.

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