Dynamo founder challenges BTL sector’s need for documentation

The UK’s buy-to-let (BTL) sector remains an ‘extremely attractive proposition’ according to the chief executive of Dynamo, although the BTL specialist also challenged the sector’s reliance on paper documentation.

Speaking in an interview recorded for Accord Mortgages’ latest Growth Series podcast, Dynamo founder and chief executive, Ying Tan, discussed the opportunities for brokers but warned of the potential innovations the market can expect in 2020.

“BTL is an extremely attractive proposition and is certainly here to stay,” Tan commented. “The market will continue to be hit by various tax changes, and I think we will see a relatively flat market over the next couple of years. We’re expecting it to be worth around £40bn this year, and I think there might be a slight dip over the next 12 months.

“I do think that is still a good, sizeable market considering that in 2008, straight after the credit crunch we were at £8bn, and that was a much more challenging marketplace.”

Tan also commented on the affordability of the market – noting that 2020 had started with a period of more political stability, and therefore a greater opportunity for the market to grow – though he also speculated over the strategies the market could adopt over the next 12 months.

“Lenders have to look at other ways they achieve their objectives,” Tan continued.

“We haven’t yet seen a full affordability lender which completely dissects your income and expenditure for a BTL property. Will that happen going forward? Possibly. Lenders have to keep innovating and keep looking at ways they can differentiate themselves from others and ensure lending remains responsible first and foremost, but also allows people in different circumstances to get borrowing within their means.”

The Dynamo chief executive also spoke at great length about the BTL sector’s potential to innovate – in particular to improve the efficiency of the broker process, as he challenged the sector’s requirement for paper-based and original documentation.

“Innovation doesn’t sit around the product design,” Tan added. “It sits around speed, efficiency and automation. One of my biggest gripes is documentation – whilst we like to think of ourselves as tech-savvy, the reality of our industry is that a file for a mortgage could be a foot high sometimes with the amount of paperwork it has, and there are still lenders asking for originals.

“In a single case, even though not all that documentation goes to the lender, the broker has the responsibility to do all that and with due-diligence. Can we look at open banking? Wouldn’t it be great to go and get that information with the authority from the client to validate their salary for example, so we can remove a lot of that paperwork?

“The challenge we have is that a lot of this technology we’re talking about – and there’s a lot of money that has come into our industry in the last couple of years – requires a joined up approach, and I think that’s where are industry is lacking at the moment.

“I don’t think mortgage brokers can be replaced by robots, but technology can make us more efficient.”

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