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Over the last few years, the number of lenders offering buy to let mortgages has been gradually increasing. However, buy to let professional landlords and those who specialise in non-traditional property continue to face a limited choice of products with many banks and building societies preferring to target amateur investors. If you have more than few properties in your buy to let portfolio you may encounter less choice when looking for a buy to let mortgage, as we investigate.
The Financial Times reports that new entrants into the buy to let lending market have ‘preferred to target amateur and first-time landlords rather than professional investors with large property portfolios or those with non-standard properties, such as Houses in Multiple Occupation (HMOs).’
“According to figures from Moneyfacts there are 69 buy to let lenders in the UK today, compared to just 46 in 2010,” said Islay Robinson, CEO of London mortgage broker Enness Private Clients. “However, while most of these lenders will happily agree a mortgage if you have a few properties, there are still only half a dozen specialist buy to let lenders that will agree a loan on an unusual property or to a professional investor with a large portfolio.”
For example, only a handful of lenders will consider a loan on a House of Multiple Occupation (HMO) – a private house rented out to at least three tenants who form separate households. The Mortgage Works, Keystone and Paragon will consider such applications but you may have to put down a larger deposit or pay a higher fee.
“Kent Reliance has a range of products suitable for this type of property,” adds Mr Robinson from the high value mortgage broker. “They will lend up to 85 per cent on a multi-let property and will consider larger homes with up to eight bedrooms.”
If you’re planning to rent your property to students or those on housing benefit then you have a wider choice of lenders. Abbey, Leeds Building Society, Aldermore and the Woolwich are amongst the lenders that will consider student lets while recent changes in criteria are also set to help landlords letting to tenants on housing benefit.
In the last month, the UK’s two biggest buy to let lenders, BM Solutions and The Mortgage Works (TMW), have ditched restrictions on providing buy-to-let mortgages to landlords with tenants on housing benefits.
The FT reports that TMW’s decision followed concerns by industry groups that the move could force landlords to exit this part of the buy to let market if they cannot get finance.
“In addition, experienced landlords with a large portfolio have increasingly found it difficult to secure lending,” added Mr Robinson, the large mortgage expert. “For example, a couple of years ago BM Solutions, one of the country’s biggest buy to let lenders – cut the maximum number of loans per landlord to just three. Many others restrict the number of properties a landlord can own to just five or ten.
“If you do have a larger portfolio, speaking to a mortgage broker can help you to find a lender who is prepared to consider your applications, even if you do have a number of investment homes,” he added.