Six reasons why landlords should re-evaluate their choice of bank

Recent data from HMRC suggests there are now around 2.65 million landlords in the UK, each jostling with a bunch of different financial challenges.

Banks could be doing more to help landlords

From service charges to rental holidays, a lot is going on. Ideally, banks should be in a strong position to support landlords on their journey, but… unfortunately, this is rarely the case.

With less and less time for one-to-one service alongside more and more regulatory and financial demands, let’s take a look at where banks need to step up. And when landlords need to walk away.

Inspired by a recent conversation I had with experts John Saunders and Conor McDermott from Monument Bank on the Dave and Dharm DeMystify podcast, here are six reasons landlords should consider switching banks.

1. You’d like more options than just a vanilla mortgage

Unlike most mortgage-seekers, landlords and investors have particular needs. And often, run-of-the-mill finance options just don’t cut it. If you want more than a vanilla mortgage, look for banks specialising in buy-to-let and property investment services.

What we see from banks is that they’ll quite willingly give you a mortgage if you can afford it, but that’s about it. To access more niche and bespoke financial options such as bridging loans, look away from the mainstream and towards banks designed around property investors.

2. You’re done with mountains of paperwork

Increasing regulations and antiquated legacy systems are a real pain for landlords, especially when deciphering the mind-bogglingly complicated conditions.

Some investors practically need a pickaxe and strong pair of boots to climb the mountain of paperwork. Yet, according to the experts, a lot of this is unnecessary. Opting for a specialised service rather than a general high street bank means fewer compromises and more personalisation.

3. You’re interested in buying commercial properties

Renting space to businesses helps diversify your property portfolio and can even offer a welcome boost to the local economy.

Investment in UK warehouses, for example, saw a record-breaking £6 billion boom in 2021, according to research by property consultancy Knight Frank.

But bafflingly, incumbent banks are not catching up with the trend despite the surge in popularity. If you’re interested in investing in a commercial property, but your bank is not making it easy for you, it might be time to look elsewhere.

Over the next year, the markets are expected to stabilise a little. And some banks are looking to offer commercial mortgages as a priority. Keep an eye out for these custom-built solutions, and don’t try to force a square peg into a round hole with your stubborn high street bank.

4. You want to buy properties through an incorporated business

The 2018 English Private Landlord Survey (EPLS), commissioned by the Ministry of Housing, Communities and Local Government (MHCLG), revealed just a teeny tiny 6% of UK landlords rent out their property as part of a company or organisation. But these landlords mean business.

And their needs are not being met by run-of-the-mill banking solutions. If you’re thinking of running your properties through an incorporated company – and scooping up the lucrative tax benefits that come with it – you may want to upgrade your bank as well.

5. You have more than one property

Nobody has time to juggle multiple different payments each month. But for landlords with more than one property, this is the reality.

If your bank expects you to manage several payments on the go every month, it may save you a lot of time and frustration to consolidate everything into one.

6. You want to access and apply for loans outside of opening hours

In recent years, financial and regulation technology has been developing at breakneck speed. These days, there is no reason why you should have to queue up at a cold and dusty bank waiting for a cashier to do some mundane admin task. Nor should you put up with nauseating automated calls and their security obstacle courses.

So, if your bank is causing you stress, look at the alternatives. With the right technological service, you should be able to complete tasks quicker, no matter what time of day they come up.

Being a landlord shouldn’t mean that you’re shackled to a lifetime of horrendous automated phone services or conditions more complicated than coding.

About the author

Dharmesh Mistry has been in banking for 30 years and has been at the forefront of banking technology and innovation. From the very first internet and mobile banking apps to artificial intelligence (AI) and virtual reality (VR).

He has been on both sides of the fence and he’s not afraid to share his opinions.

He is CEO of AskHomey, which focuses on the experience for households, and an investor and mentor in proptech and fintech.

Follow Dharmesh on Twitter @dharmeshmistry and LinkedIn.

Read all his “I’m just saying” musings here.