Buy To Let and Social Housing

Would I be able to get a mortgage for DSS tenanted and local housing authority tenanted properties?

Is possible to get a mortgage on housing tenanted by asylum seekers?

I am looking for a mortgage on a student Buy to Let property, what do I need to be aware of?

What else should I be aware of?

Are HMOs easy to gain mortgage funding on?

How has the HMO licence affected Buy to Let mortgage lending?

I am purchasing an ex local housing authority property, what is the mortgage situation?

Why is this the case?

How will the tenancy deposit scheme, to be introduced on 6^th April 2007, affect Buy to Let funding?

How will Home Information Packs (HIPS) affect Buy to Let financing?

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Buy To Let and Social Housing

The information below provides landlords with an independent guide to the mortgage financing of properties to let to social tenants and for purchasing ex local housing authority property.  For your information, social tenants will include DSS tenants, asylum seekers and local housing authority tenants.

This section also provides valuable information for those landlords who let to students in local authorities around the UK.

·          Social tenants:

Would I be able to get a mortgage for DSS tenanted and local housing authority tenanted properties?

Yes, there are a small number of lenders who offer mortgages for these tenant types.  You should be aware however that the majority of mortgage lenders do not lend to this type of tenant.   Due to this fact these lenders tend to be relatively specialist their products tend to be more expensively priced than mainstream Buy to Let mortgages.  Additionally it is important to be aware these specialist lenders aim their products at portfolio landlords, so new landlords may find borrowing more difficult.
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Is possible to get a mortgage on housing tenanted by asylum seekers?

Again it is possible, but lending options will be extremely limited and the majority of mortgage lenders will not consider this tenant type.  Often the best way to fund this tenant type is on bespoke commercial mortgage lending terms.
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·          Student tenants:

I am looking for a mortgage on a student Buy to Let property, what do I need to be aware of?

Although student property is extremely popular, a high proportion of Buy to Let mortgage lenders do not actually offer mortgages for student tenanted property.  It is additionally important to be aware of the type of property the student will live in, houses in multiple occupancy can additionally attract financing limitations.
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What else should I be aware of?

Each lender had their own set of rules relating to the student Buy to Let market, some lenders insist on having students on one assured short hold tenancy agreement.

If your child lives in the property the mortgage will become a regulated mortgage transaction and therefore non regulated mortgage lenders will not be carry out the transaction.
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·          Housing in Multiple Occupancy:

Are HMOs easy to gain mortgage funding on?

Yes, but there are a large proportion of Buy to Let mortgage lenders who will not fund this property type.  It is also important to mention to your mortgage lender if the property is a licensable HMO or a non-licensable HMO, many lenders have made the decision not lend on the new licensable HMO category.
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How has the HMO licence affected Buy to Let mortgage lending?

Many lenders are still forming their opinion this property type.  The companies who do lend in the sector are still formulating their lending criteria. 

The main problem is a property purchaser is obviously not going to apply for the HMO licence until they have actually purchased the property.   Therefore, the majority of mortgage lenders are insisting on evidence of intent to apply for the licence is required from the borrower rather than the actual licence itself.
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·          Ex Local Housing Authority:

I am purchasing an ex local housing authority property, what is the mortgage situation?

Most mortgage lenders will not lend on this property type, however there are a number of specialist mortgage lenders who will lend on this type of property.  Please be aware mortgage products will be more expensively priced than the most competitive rates available in the marketplace.
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Why is this the case?

Unfortunately mortgage lenders consider this property type is less resalable and attractive, they therefore represents a greater larger risk.  Mortgage lenders will either avoid lending or pricing mortgage products more expensively.  
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Regulation and the affect on funding:

How will the tenancy deposit scheme, to be introduced on 6^th April 2007, affect Buy to Let funding?

It is envisaged not at all or very little, the Buy to Let mortgage market is expanding and will represent 10% of all mortgage lending by the end of 2007, and this law is unlikely to affect demand.  Currently mortgage lenders do not consider any deposits in the landlords finances or in their ability to repay monthly mortgage payments.
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How will Home Information Packs (HIPS) affect Buy to Let financing?

The Act due to be introduced in June 2007 will not affect Buy to Let mortgage lending for purchasers, it will only add costs to the seller.  However, it will obviously have an affect on fee free remortgage Buy to Let mortgage products, because some of the fees element will disappear when the legalisation is introduced.  Therefore, mortgage lenders may start to offer alternative incentives to encourage landlords to choose their products.
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If you would like to ask a question or if you need any information regarding Buy To Let or Social Housing please ask a question below:
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