Data collected by Hamptons reports that landlords made up 15% of all agreed sales in November 2020, the highest total in 4 years. Investors were said to have bought approximately 134,000 properties in 2020, up slightly from 133,000 in 2019. Interestingly, according to the research, a record high of 51% of the purchases was in cash. This might suggest that the larger portfolio and professional landlords have been more active in the market during the pandemic. In addition, several options remain available in the lending market that can allow you to refinance a property within a 6-month period. In most instances, the loan is based on the purchase price but a few providers such as Kent Reliance or Foundation Home Loans can use the open market value if works have been carried out to justify the increase.
What options remain available however for those seeking to use a mortgage? Let us look at a few different areas of the buy-to-let market below.
As of 22/12/20 BTL purchase products at 75% LTV on a 2-year fixed-rate starting at 1.59% when buying in your personal name. The equivalent for a Limited company purchase is 3.04% with Kent Reliance. Both lenders have flexible criteria with no minimum income requirement. 80% LTV products have also re-emerged which shows an increasing appetite to lend, with pricing on a 2-year fixed-rate starting at 3.79% with Landbay.
Maximum LTV remains at 75% with rates starting at 3.35% on a 2-year fixed product via Paragon as of 22/12/20. Some lenders are still reducing the number of bedrooms that they can lend on, but Paragon can help on properties of up to 20. Criteria vary but Kent Reliance can help first-time landlords going straight to HMO letting and Fleet Mortgages can be very flexible on the type of tenant, considering assisted living and even SERCO leases.
Maximum LTV as of 22/12/20 is 75% again with the Paragon HMO product also being suitable for freehold blocks of up to 20 units. We are seeing an increase in enquiries from developers wanting to sell several flats in a block and then keep the remainder, whether on one facility or separate. Both options are possible and if you finance each flat individually lenders like Foundation Home Loans and Landbay even have products without early redemption penalties.
While mortgages for holiday lets are easier there are a few options for serviced accommodation. A property qualifies as a holiday let when a surveyor can confirm that there is a specific demand from holidaymakers. For serviced accommodation properties outside of typical tourist destinations, Foundation Home Loans has a 75% LTV 2-year fixed product priced at 3.89% although you must have at least one existing BTL.
The appetite for commercial lending varies as lockdown rules change. Semi-commercial lenders have largely returned with Hampshire Trust Bank and Shawbrook both at 75% LTV and they allow interest only. Pure commercial lending is more difficult to navigate with some high street banks having reigned in their offering. There are still a few specialists active in the market, however, especially for the right proposition.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Some forms of Commercial Lending and Buy to Let advice are not regulated by the Financial Conduct Authority. Lee Langley is the Principal Mortgage and Protection Adviser at OnPoint Mortgages.OnPoint Mortgages a trading style of L&D Mortgages Limited is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Registered address: 25 Homefield Road, Bushey, Hertfordshire, WD23 3AP
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