Buy-to-let lending criteria exclude “newly renovated”

Permalink: Buy-to-let lending criteria exclude “newly renovated”
by Gill Montia

Buy-to-let broker, Mortgages For Business, has reported that changes in lending criteria amongst the UK’s buy-to-let lenders are affecting funding for new and newly renovated properties.

Securing a mortgage for new build and converted properties has become increasingly difficult over the past 12 months and Capital Home Loans is the latest lender to withdraw from these markets.

Jonathan Moore, head of marketing at Mortgages for Business, comments: “New builds is the one area of concern in the sector, particularly in some city centres where supply is currently outstripping demand.”

Adding: “It is essential however not to judge the whole buy to let investment proposition on the performance of new builds. Established properties and particularly HMOs and flats above commercial properties provide good long term yields. The fact that renovated flats and houses in the last twelve months are classed as a new build may be of surprise to many investors.”

Meanwhile, deposit requirements for buy-to-let borrowers continue to rise. UCB Home Loans, the specialist buy-to-let lender of Nationwide, is now demanding a 25% deposit, up from 15%.

Irish Permanent has lowered its maximum loan-to-value (LTV) to 80% and Mortgage Express, the UK’s largest buy-to-let lender (according to Council of Mortgage Lender statistics) has withdrawn its 90% LTV products.

Finally, first time buy-to-let investors are actively being discouraged from entering the market; the Mortgage Works and UCB Home Loans will no longer consider applications from novice landlords.