Buy-to-let market reacts to tax changes in January – Ying Tan’s Market Monitor
03-02-2016
Ying Tan, managing director, Buy to Let Club (part of The Buy to Let Business)
The Buy To Let Business The Buy To Let Club Ying Tan
Buy-to-let market reacts to tax changes in January – Ying Tan’s Market Monitor
The Buy to Let Club's Ying Tan looks at how lenders have tweaked criteria and product options in light of incoming tax changes to the landlord mortgage market.
We’re just a few weeks into the New Year but the lull of the festive season is well and truly behind us. Lenders have been busy changing criteria and updating product ranges and many of the changes are as expected.
The increase in rental cover calculations is a case in point. It’s a trend many lenders are following. In the last few weeks alone TSB, BM Solutions and Barclays have all increased their rental cover from 5%. In fact, of the big high street banks, only Santander remains at 5%. It’s only a matter of time before Santander follows its contemporaries but for now at least it offers a competitive choice for brokers.
More positively, Godiva announced it was moving into 80% loan-to-value (LTV) for buy to let with a 125% at 5% product. The loan has a rate of 4.79% and comes with a £1,999 fee.
There was more good news from relatively new kid on the block Foundation Home Loans (FHL). It announced its limited company products are now available on prime plans with no interest rate uplift. First-time landlords are now able to take out limited company buy to lets too.
Other criteria changes from Foundation include the introduction of a £1,999 fee on all loans up to £250,000, as opposed to 2%.
Given the cuts to landlord tax relief we fully expected the market to react by addressing the products available in the limited company space, FHL is clearly moving fast.
But the biggest headline in the limited company field came, perhaps unsurprisingly, from Precise. The lender has launched a houses in multiple occupation (HMO) and limited company buy-to-let range with rates starting from 4.09%. The range includes two-year trackers and fixed rates as well as five-year fixed and lifetime trackers, available at 75% and 80% LTV.
The HMO buy-to-let range is available at 80% LTV exclusively via packagers. The maximum loan size is £1m and the maximum number of bedrooms allowed is six.
Finally, Interbay has also been making moves in the HMO space with the launch of its new HMO refurbishment range and the revamp of its buy-to-let refurbishment products. Both ranges come with the option of remortgaging for both buy-to-let and HMO properties.