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85% of buy-to-let lenders still lending

Some 42 of the 49 buy-to-let lenders operating at the beginning of March are still lending despite the impact of coronavirus, analysis from Mortgages for Business shows.

Together Money and Vida Homeloans have both pulled out of the market, while HSBC is no longer accepting buy-to-let applications.

However Santander, Clydesdale, Precise Mortgages and Kent Reliance have now restarted lending, after initially taking a step back.

Shawbrook and Paragon meanwhile are using virtual valuations against standard properties up to 75% loan-to-value.

Steve Olejnik, managing director of Mortgages for Business said: “Lenders have cut down the sorts of landlords that they will lend to.

“They’re pulling product ranges, tighten lending criteria, and increasing margins. But different lenders are derisking against different kinds of landlord borrowers. So, while some lenders are no longer lending to first time landlords, there are still lenders who are.

“My advice to landlords looking to remortgage is act sooner, rather than later. You may have to answer a few more questions when you’re applying for a remortgage that you would have had to last month – but a broker will still be able to find you a deal.”

Saffron Building Society withdrew from the market before the outbreak in March, though the lender has indicated that it will return to the market later in the year.

Lenders that have stopped lending to landlords since include: HSBC; Foundation Home Loans; Together Money; Vida Home Loans; Platform Home Loans; State Bank of India; and Furness Building Society.


Source: Property Wire

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Nearly 50% more lenders lending to limited companies

The number of buy-to-let lenders lending to limited companies has risen by 47% over the past year, Mortgages for Business’ Buy to Let Index has found.

In the last quarter alone, three new lenders have come to the market with 22 now competing in the space. In Q3 2017 there were only 15.

These new lenders include West Bromwich Building Society, Magellan Homeloans and a lender which is currently running an exclusive pilot with Mortgages for Business.

Steve Olejnik, managing director at Mortgages for Business, said: “It has been encouraging to see so many new entrants to the specialist end of the buy to let market in the last quarter, putting product availability at an all-time high.

“This just goes to show there is still a lucrative, buoyant market out there following on from the recent regulatory changes.

“With the uncertainty surrounding Brexit and the possibility of another Bank Rate rise in the near future, I am not surprised that the majority of landlords are choosing to fix.

“It will be interesting to see what knock-on effect this will have on the buy to let remortgage market.”

As a result of these new lenders, there are more buy-to-let mortgage products in the market. Overall the index shows that in Q3 18, the total number of mortgage products available to landlords borrowing via a limited company averaged at 628.

This figure has more than doubled year-on-year from Q3 17’s average of 263.

In the wider mortgage market, an average of 1,571 products were available between July and September, in contrast to Q2 18 when the number of products averaged 1,547.

In terms of proportions of the mortgage market, 44% of completed buy-to-let mortgage transactions were made by limited companies, up 42% from previous quarter.

Corporate structures, predominately Special Purpose Vehicles, can provide financial efficiencies and have proved increasingly popular since the changes in income tax relief on landlords’ finance costs were announced in July 2015.

The trend for remortgaging continued with only one-third of buy-to-let mortgage transactions being made for purchases. The only property type seeing an increase in transactions was HMOs, where 36% of transactions were purchases, up from 33%.

It is interesting to note that 96% of landlords borrowing via Mortgages for Business opted for a fixed rate buy-to-let mortgage in Q3 2108, up from 93% in the previous quarter and 73% of those choosing to fix opted for five years.

If the preference for 5-year fixed rates continues, it will have a knock-on effect of reducing the volume of buy-to-let mortgage borrowing.

Source: Mortgage Introducer

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Buy-to-let lenders criticised for tenant discrimination

The Government is facing calls to end the “discrimination” against benefit claimants by buy-to-let mortgage providers.

The Residential Landlords Association (RLA) has urged action against the “unjust practices” after its research found 66 per cent of lenders representing 90 per cent of the buy-to-let market did not allow properties to be rented to tenants in receipt of housing benefit.

The research was carried out last year by the association’s mortgage consultants, 3mc, and found TSB, Virgin and NatWest were among the lenders which imposed the renting restrictions.

David Smith, policy director at the RLA, said: “With growing numbers of benefit claimants now relying on the private rented sector, it is shameful that many lenders are preventing landlords renting property to some of the most vulnerable in society with little or no justification.

“The banks have had long enough to get their house in order. It is now time to take firm action to stop such unjust practices.”

The RLA wrote to the Treasury minister responsible for banking, John Glen, calling for the Government to use its influence as a shareholder in certain banks to end the “discriminatory” practices.

The association also asked the Financial Conduct Authority and Bank of England to investigate the extent of the problem and prepare plans to end it, claiming the practices breach the FCA’s ‘Treating Customers Fairly’ agenda.

The letter also suggested the Equalities and Human Rights Commission carry out a review of whether the lenders’ practices breach equalities law.

The RLA’s calls came after news a buy-to-let borrower had her mortgage revoked when the lender discovered she rented to a benefit claimant.

Helena McAleer, a landlord from Northern Ireland, contacted her bank, NatWest, to discuss releasing equity from her property – but instead Ms McAleer claims the lender revoked her buy-to-let mortgage citing its policy prevented rentals to benefit claimants.

Ms McAleer said the bank instructed her to “seek an alternative tenant” but it is understood NatWest did not tell her to evict the tenant.

NatWest’s buy-to-let eligibility criteria reads: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or ‘Related Person’ tenancies.”

A NatWest spokesman said: “The bank has specific lending criteria and is not able to offer mortgages in certain circumstances, which are made clear on a customer’s terms and conditions.

“There are alternative providers who may be better suited for customers in these circumstances.”

Ms McAleer has launched a petition and online campaign page calling for measures to close these “loopholes”.

However, a UK Finance spokesperson said most lenders do not place restrictions on landlords letting to benefit claimants.

He said: “Any landlord wanting to let to tenants in receipt of benefits should be able to find a lender that will allow this.

“We always encourage individuals to speak to their lender if they have any concerns and research the market to find the best possible deal for their needs.”

Source: FT Adviser