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Referrals… commission… fees

Offering mortgage referral services to new investors, experienced landlords – and homebuyers – could secure your agency’s future.

The Negotiator

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Recent research by Close Brothers revealed that 47 per cent of non home-owning employees in the UK don’t believe they will ever be able to afford to get on the property ladder.

The Close Brothers Financial Wellbeing Index, developed in conjunction with the corporate wellbeing expert Professor Sir Cary Cooper, shows that this figure is despite home ownership remaining an aspiration for 65 per cent of nonhomeowners.

Average house prices in Britain have risen by 270 per cent over the past two decades, according to the ONS, pushing back the age that people become homeowners by at least eight years since 1997.

Even then, those who want to buy need to be saving and they need to have a plan. However, four in ten employees said they don’t know where to start when it comes to getting onto the housing ladder.

It follows then, that despite the perceived challenges for landlords, the demand for rented housing can only increase and buy to let landlords – and their letting agents – clearly have an opportunity for growth. However, many agencies shy away from involvement in finance, missing out on building relationships with their landlords, thus missing out on further business. As Rudyard Kipling said, “If you can keep your head when all around you are losing theirs…” you could be not just surviving difficult times, but building a stronger business base with multiple income streams.

  • There were 27,370 new first-time buyer mortgages completed in April 2019, 7.9 per cent more than in the same month in 2018.
  • There were 25,450 homemover mortgages completed in April 2019, 6.4 per cent more than in the same month a year earlier.
  • There were 5,100 new buy-to-let house purchase mortgages completed in April 2019, the same as this time last year. There were 14,400 remortgages in the buy-to-let sector, the same as this time last year.

Link to Business featureAlastair McKee, Managing Director at One77 mortgages, says, “Human nature is a strange old thing, when the market is buoyant and business is good, sales are easy and all the peripheral sales areas usually get forgotten! Then, when tougher times come, businesses scrabble around looking at what else they can add to the bottom line to keep the business ticking along.

“Mortgage referral is one of those areas. The agents that really buy into it have an additional straightforward income stream. They also have a lot more control over what is going on and therefore can keep chains alive better which results in more completions – in a quicker time – with fewer chains collapsing.

“The corporate agencies are good at it and they know that it adds a significant amount to their bottom line.”

It is all about flexibility, and an open mind – moving away from the belief that some agents have that the financials are not their business – and missing out on an obvious way to hold the transactions together.

Matthew Fleming-Duffy imageMatthew Fleming- Duffy, CeMAP CeFA FCMI, at Cherry Mortgage & Finance, says, “I guess the key to surviving as a high street estate agent is adaptability … providing a professional service and having a good online presence goes without saying, and business areas such as buy-to-let investment are a key market to focus on.

“However, landlords are facing taxation changes, stress-tested affordability checks on buy-to-let mortgages and a requirement for a good EPC rating – so they need support from their letting agent.

Mortgage brokers have access to many lenders that do not have a high-street presence or may operate limited distribution models and can assist agents with mortgages those considering let-to-buy, property investors purchasing buy-to-let properties, purchases via auction, overseas buyers and older applicants.”

Buy-to-let investment continues

Building a lettings business may look less attractive than it did when fee incomes were relatively secure, but building stronger relations with mortgage lenders, particularly when they have special experience and the right products for landlords, can create a strong and stable operation for agents.

The specialist lender, Together, has for 45 years, been lending to residential investors with a well-honed range of loan products and working with property agents to support their landlords’ portfolios whether those purchases are from the high street agencies or at auction.

Link to Business featureScott Hendry, Director of Auction Relationships at Together says, “Tax and regulatory changes in recent years have taken their toll on the number of landlords, with some deciding to quit the market altogether. However, this could lead to opportunities for savvy ‘professional’ investors as more properties come onto the market. There remains a demand for good quality rental accommodation and UK property is still seen as a reliable and stable investment.

“To protect their income and returns, investors are adapting their portfolios and business models to take into account the new rules.

“For example, many are now purchasing rental properties with commercial mortgages through limited companies, while others are finding better value by investing in more complex and less ‘in demand’ property types – such as Houses in Multiple Occupation (HMOs) and semi-commercial properties. These are often found in cheaper ‘up-and-coming’ rental hotspots outside the most popular – and expensive – prime postcodes.”


“We work with a number of multi branch agents and some of them are earning well into six figures from their mortgage referrals – makes you think eh? This sort of income, in tougher times is a significant income stream and could be the difference between surviving your competitors or not. Regardless of size, all estate agents should have a strong link with a good broker firm.” Alastair McKee, One77 Mortgages.

How to find a good mortgage broker

The best advice is to pay careful attention to which broker(s) will suit your agency business. Alastair McKee at One77 Mortgages says, “It still amazes me that many multi-branch agencies don’t have a joined up approach to mortgage referrals. They let each branch sort out their own relationships meaning that everything is disjointed, they have no management information, income is lower than they could negotiate if they gave more volume to one broker firm as well.

“Key to finding a good firm is how they work and finding a ‘no fee’ broker (like us) as there is no objection from a client to using us as its at no cost to them.

“Secondly, quick turnaround times, it’s pointless using a one man band who is often out and about or maybe already too busy as you simply won’t get the service you can from a larger firm with a dedicated team allocated to you.

“Thirdly, getting tied up with a broker firm that has genuine access to the entire UK mortgage market – you’ll be amazed at how many brokers can’t access some of the main lenders which, if this is the case means they will have less success at successfully placing your clients business, lenders such as HSBC, Bank of Ireland, TSB, Post Office are all very particular about which broker firms they work with and all of these lenders have some great criteria that other lenders don’t, match-this results in more success for you and your clients as well as much needed revenue!”

“Auctions, people needing specialist finance for commercial/semi commercial properties that they want to convert to residential use, bridging loans (fantastic if you have a chain that’s about to collapse), refurbishment loans will all help you attract more sales, more buyers and more sellers if you have a tie up with a broker that can do all of this as well as the vanilla residential and BTL deals as well. This type of funding is growing massively at the moment and rates have fallen significantly as more lenders become involved in this area and there is more demand for it. Again, when was the last time you declined to take a property on because you thought it would be tricky to sell unless you had a cash buyer on the books? With this type of specialist lending, you’d be amazed at what can be achieved with specialist finance involved.”

If you are not already doing all of the above now is the time to review it and get this vital additional income stream adding value to your business, not only will it provide income and control of the sales process but it will also differentiate you from your competitors and mean you will become the go-to firm in your locality as you get results and make things happen!

The last word:

Paul Smith, CEO, haart estate agents

“The latest data on mortgage lending trends reveals that there is still a vast appetite to move home – even amidst the current climate of uncertainty. First-time buyers are continuing to make up a bulk of this activity, with a significant 7.9 per cent increase in mortgage completions for these buyers that are finally able to get a foot on the housing ladder. However, in April we also experienced home movers spring back to action. With a 6.4 per cent increase in mortgage completions – the highest amount measured so far this year.

“Our latest branch data shows that there are 12 buyers chasing every instruction across the UK, as new buyer registrations return to a pre-Brexit vote level, but the number of new instructions continues to fall. Although we did experience a seven per cent boost in transactions on the year in May – the market could be flying if more Brits had the courage to list their home for sale while demand for stock is so high.

“What we need is a new leader without Brexit blinkers. Whether renting, buying or letting, the property market affects everybody in the UK, so it is vital that the Government pays housing policy greater attention.”

August 29, 2019

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