Please note:

Leeds Building Society only accepts mortgage applications from intermediaries where they are providing an advised sales service, with the exception of Buy to Let & Holiday Let applications. It is the responsibility of the intermediary to ensure that all applicable law including, without limitation, the Financial Conduct Authority rules on advised mortgage sales are complied with including, without limitation, the provision of adequate explanations.

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The maturing of buy to let

In the first quarter of 2016 there was an increase in the number of buy to let (BTL) property purchases. [1] This was ahead of the new stamp duty land tax for additional properties introduced on the 1st of April of that year.

Figures from UK finance show that 90%[2] of mortgages taken in that period were on fixed rates. As two year fixed rates have been the most popular in recent years,[3] it’s likely many of your landlord clients who purchased a BTL property are close to maturity on the fixed rate period. Unless they secure a new fixed rate they’ll revert back to their lenders BTL variable rate, which can be higher than the residential SVR.

Product transfer options

There are now more options for you to consider when your client is at the end of their fixed rate period. Many lenders have enhanced their retention ranges by introducing product transfers, a huge step in recognising the contribution you make to the customer journey, as well as simplifying the process for you and your clients.

What's changed?

Now is an ideal time to have a review with your BTL clients; as there have been several changes since that wave of purchases in 2016. Including an annual reduction in tax relief to the basic rate of income tax, meaning by 2021 landlords won’t be able to claim mortgage interest payments as a business cost, and a change to the way lenders underwrite landlords with a portfolio of properties.

We’ve also seen the first base rate rise for 10 years[4] and commentators are speculating that there may be another rise in the next 12 months or so.[5]

In response to these changes and maturing products, you may see your clients trying to regain the returns eroded by these changes by reducing and locking down their monthly mortgage payments.

Our BTL criteria:

  • Rental income must be at least 140% of the interest payable on a stress rate of;- 5.00% for non-capital raising 'like-for-like' remortgages and for background BTL with other lenders.
  • - 5.50% for purchases and capital raising remortgages.
  • No minimum income requirement (evidence of income is still required and affordability will be assessed).
  • Maximum portfolio size of 10 mortgaged rental properties, irrespective of lender.
  • Maximum of 4 rental properties can be mortgaged with the Society, whether BTL, holiday let or a combination of both.
  • Maximum age at the end of the term is 85 years. 

Our products:

We have a range of BTL products available up to 70% LTV. We also have a dedicated range for portfolio BTL and holiday let. 

[1] https://www.bankofengland.co.uk/-/media/boe/files/statistics/mortgage-lenders-and-administrators/2016/2016-q1.pdf?la=en&hash=EDA5B99F49F481C055666F8C46ED216CB36531A7

[2] UK finance, ml5

[3] UK finance, s14

[4] https://www.ukfinance.org.uk/the-winners-and-losers-from-a-base-rate-rise/

[5] http://www.mortgagesolutions.co.uk/news/2018/03/13/spring-statement-2018-rate-rises-may-not-happen/

 

This information is for use by FCA authorised intermediaries only and must not be distributed to potential borrowers.