TSB cuts rates, Vida refreshes criteria and Nationwide reviews leasehold lending

TSB cuts the rates on select buy to let purchase and remortgage deals, while Nationwide cracks down on leasehold lending and Vida Homeloans improves its specialist buy to let criteria.

TSB has reduced the rates on its two-year fixed buy to let products by between 0.20% and 0.25%.  The rates on the lender’s three-year deals have also been reduced by between 0.10% and 0.15%.

Meanwhile, five-year deals have been cut by 0.15% to 0.25% and the rates on TSB’s two-year trackers will fall by up to 0.25%.

The rate cuts will apply to both buy to let purchase and remortgage deals.

Nationwide is taking proactive steps to help those homeowners trapped in unfair leasehold agreements by introducing requirements that will impose fairer and more transparent lending conditions for those borrowers buying new-build leasehold properties.

The move follows increasing fears that homeowners are being tied into unfair leases, which have seen ground rents on certain developments double every five years.

As from 11 May, the required length of leasehold on a new-build flat will be 125 years, and for houses it will be 250 years.

Ground rents will no longer be allowed to exceed 0.1% of the property value and should be ‘reasonable at all times during the lease term’.

Nationwide has also stipulated that any increase in ground rent will need to be linked to a verified index, such as the Retail Price Index.

Robert Stevens, Nationwide head of property risk, data and strategy said:

“We are doing this to address the practice of using leasehold tenure where this is unnecessary, particularly for new build houses, and to ensure that onerous leasehold terms, including ground rents, are properly considered and controlled.”

The new criteria will impact new-build transactions with Nationwide and The Mortgage Works, but will not affect properties being sold second hand.

Specialist intermediary mortgage lender, Vida Homeloans, has made improvements to its buy to let criteria.

The lender has removed all constraints on debt consolidation and will now allow capital raising remortgages for any purpose.  It has also removed the need for a floating charge on Special Purpose Vehicles (SPVs), which are set up for property investment.

Its criteria relating to Multi Unit Blocks (MUBs) has also been reviewed and Vida will now allow a minimum valuation per block (rather than per unit) up to five units.

The length of landlord experience required by the lender has also been revised down from three years to 12 months for both MUBs and Houses in Multiple Occupation (HMO).

Vida will still accept first-time landlords for its standard buy to let flats and houses and has increased the maximum loan-to-value (LTV) on entire portfolios from 75% to 80%, while reducing the minimum property valuation to £50,000.

Vida’s buy to let rental cover requirements are now as follows:

  • Basic rate UK tax payers 125% cover with top up from 115%
  • Higher rate UK tax payers 140% cover with top up from 120%
  • Trading limited companies/SPV/LLP 125% cover with top up from 115%
  • HMOs and MUBs from 130% cover

 

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