Business as usual?

In the run-up to the General Election the buy to let mortgage market was quieter than usual.

Brokers were living in a sort of limbo land as both lenders and investors held their collective breath until the result was declared.

Then on Monday 11th May, the office was alive with ringing phones and we’ve been busy ever since. So what will the buy to let mortgage market look like now that the Conservatives have a small majority?

I’m expecting a very strong couple of months in the lead up to the summer holidays. I think it likely that house prices will continue to creep up and investors will be keen to continue their strategy of refinancing to expand their portfolios.

Product numbers are now up past the 900 mark and I expect them to keep rising over the next few days as we load the rates from new buy to lender TSB Intermediary into the mix.

Pricing remains extremely competitive and would expect this to carry on for some time. It certainly doesn’t look like the Bank of England is in any rush to raise interest rates.

There have been some minor price reductions post-election from the likes of Fleet and Accord.

We’ve just had a visit from the BDM at new buy to let lender TSB Intermediary and I must say, its and criteria look interesting:


• No minimum income requirements

• No minimum time employed or self-employed

• No first-time buyers except applicants who have owned a property in the past

Discussing these points with my colleagues we think although it’s a very bullish start, the criteria could well tighten if TSB is inundated with applications. Other noteworthy criteria are:

• Max loan amount of £500k

• 65% LTV on new-builds• Max 5 beds

• Max 5 sharers on 1 AST but no students

• Max exposure with TSB 1 resi plus 3 BTLs (excluding LBG)

• No max number of mortgaged BTLs in the background

We are seeing an increasing number of options for investors looking to finance their buy to lets through limited company vehicles.

There are now lots of options for SPVs including new lenders Axis Bank and State Bank of India.

Foundation Home Loans currently doesn’t lend to SPVs but I understand it could change this policy in the very near future.

For trading limited companies there are fewer options but as I write this article I hear that Norwich & Peterborough is refreshing its range to include two new rates that work for both SPVs and trading limited companies - Bank Rate + 2.99% and 4.29% five year fixed both to 75% LTV with arrangement fees of 1.25%.

Unfortunately, I can’t put either of these rates into my best buys because I don’t have the full details at time of going to press.

Other limited company lenders include Keystone, Shawbrook and peer-to-peer platform Landbay.

In the wider buy to let market, a Tory government means that the threat of rent caps has receded although selective licensing also remains a bone of contention between landlords and Local Authorities.

Most councils hold up licensing as a way to kick out rogue landlords and offer protection to tenants.

However, any new proposals for schemes that cover up to 20% of the authority area, or 20% or more of privately rented properties now have to apply to the Housing Minister for approval. This new ruling only applies to newly proposed schemes (post 1st April 2015).

This means that already proposed schemes in Croydon, Oldham, Rotherham, Tower Hamlets and Waltham Forest are likely to go ahead.

Newham was the very first Local Authority to introduce a borough-wide scheme in 2013 and reportedly collected £6.5m in just 12 months.

It now claims that more than 35k properties have been licensed – exactly the same number of privately rented properties that were identified in the 2011 census.

Now, the same crew that set up the scheme in Newham, has moved onto Croydon with landlords told that they should expect to pay £750 per let property every five years, cut to £350 if they apply within the first three months of the scheme.

With an estimated 30k privately rented properties, Croydon would be looking at a scoop of £22.5m. Good for the council maybe but not good for everyone else. Costs will ultimately be passed onto tenants and we could even see some lenders cease to lend in these areas.