TMW, Kensington and Teachers BS update BTL products – round-up
The Mortgage Works (TMW) has withdrawn four of its new business deals and increased the rate on another.
The lender, which is part of Nationwide Building Society, has increased the rate on its two-year fixed limited company product up to 75 per cent loan to value (LTV) with a £995 fee to 3.39 per cent from 3.19 per cent.
Two of those deals withdrawn are also from its limited company range, both with no fee, while the others are five-year fixes from its mainstream range up to 50 per cent LTV with £1,995 fee.
Kensington cuts rates
Kensington Mortgages has cut rates on its buy-to-let deals by up to 0.5 per cent.
The lender has four fixed rate products available at up to 75 per cent LTV open to individuals or limited companies.
The two-year fixes are now available at 4.14 per cent with a £1,999 fee, or 4.49 per cent with no fee – assessment rates are at 6.15 per cent and 6.49 per cent respectively.
A pair of five-year fixes are live at 4.24 per cent with a £1,999 fee and 4.59 per cent fee free – assessment rates for these are unchanged.
Teachers BS extends holiday let deals
Teachers Building Society has added two fixed rate products to its existing variable rate holiday let deal.
The mutual said these were aimed at supporting increased demand from new and existing property investors looking to capitalise on growth in the UK holiday-let market.
“As more consumers plan to take a break on home soil as a result of the ongoing pandemic, the need for self-catering holiday accommodation in popular destinations is growing,” it said.
The products, which are available from today are available up to 75 per cent LTV, with the three-year fix at 3.49 per cent and the five-year loan at 3.74 per cent.
Both products have a £99 application fee and a £899 arrangement fee.
Teachers for Intermediaries business development manager Ralph Punter said: “As our own research has shown, consumer demand for UK based holidays has increased as a direct result of the pandemic, a trend we expect to continue into next year too.
“Combined with the recently announced stamp duty holiday, we expect to see increased interest in the holiday let market from investors.
“Our new mortgage products will support those looking to purchase holiday-let homes for short term rental purposes.”
UTB increases LTVs for self-employed borrowers
The change applies to all residential mortgage and second charge products.
However, existing restrictions continue to apply for those working within the travel, leisure and entertainment industries.
UTB may also require three months’, rather than one month, business bank statements during underwriting to evidence affordability and sustainability.
All other proof of income requirements remain the same.
Specialist Lending Solutions understands that UTB is likely to be making further changes to its proposition shortly.
United Trust Bank commercial director – mortgages Buster Tolfree (pictured) said: “Brokers have had it tough and we recognise the need to support them through these challenging times.
“This is the first of a raft of mortgage product, criteria and technology enhancements UTB will be implementing throughout the summer, all aimed at helping brokers to write more business.
“Watch this space for the official launch of our summer campaign next week.”
Government considering further measures to protect tenants from eviction
This appears to potentially include specific advice for eviction cases taken to court, but it does not appear there is a plan to extend the possessions ban.
Housing minister Christopher Pincher said ending the ban was “an important step towards transitioning out of emergency measures and allowing the market to operate”.
He noted it was important to ensure all people – landlords and tenants – had access to justice in cases not related to Covid-19, such as anti-social behaviour and longstanding cases pre-dating lockdown.
Responding to a written question from Labour shadow cabinet office minister Helen Hayes asking whether an extension was planned, Pincher added that it was right for the government to consider how measures should adapt to the next stage of the coronavirus crisis.
“We recognise that when possession cases are being heard, further steps may be needed to protect the most vulnerable,” Pincher continued.
“Landlords must follow strict procedures if they want to gain possession of their property, depending on the type of tenancy agreement in place and the terms of it.
“The government has also been working closely with the judiciary, legal representatives, the advice sector and housing sector stakeholders through a working group convened by the Master of the Rolls.
“This group is considering arrangements that will mean that courts are better able to address the need for appropriate protection of all parties in the current legislative framework once the suspension of proceedings ends.”
In another written answer, Pincher revealed that as of 13 July, 13 entries had been added to the rogue landlords and property agents database this year.
Nationwide publishes rates for 90 per cent LTV range
It is also increasing rates on its 85 per cent LTV range and some of its shared equity deals from 16 July.
The 90 per cent LTV products are available from 20 July only to first-time buyers and include fixed rate and tracker deals, with fee and no fee options.
The following products which come with £500 cashback and free valuations will be open to first-time buyers, with no set limit on the number available:
- Two-year fixed rates: 2.49 per cent with a £999 fee; 2.74 per cent with no fee
- Three-year fixed rates: 2.79 per cent with a £999 fee; 2.99 per cent with no fee
- Five-year fixed rates: 2.79 per cent with a £999 fee; 2.99 per cent with no fee
- Two-year tracker rates: 2.59 per cent with a £999 fee; 2.84 per cent with no fee
All products are available through brokers and direct with Nationwide.
The mutual has amended its criteria for these products.
The property must be a house of at least two-years old and the maximum term is 25 years, while applicants will be subject to enhanced affordability and credit score criteria.
Nationwide Building Society director of mortgages Henry Jordan said: “Our return to the 90 per cent market is aimed at helping people into a home of their own, but it is also important to give first-time buyers a choice to suit their personal situation.
“That is why we are launching a range of fixed and tracker rate mortgages with different term and fee options.
“Given the competitive rates on offer, we expect these to prove extremely popular when they launch on Monday.
“By not having a set limit on the number of mortgages available, we aim to help as many first-time buyers get a foot on the ladder as we can at a time many may feel like they have been frozen out.”
In addition, on 16 July Nationwide will be increasing rates on its 85 per cent LTV range by up to 0.45 per cent, while rates on the mutual’s shared equity range at 60 per cent and 75 per cent LTV range will increase by 0.15 per cent.
Jordan continued: “These rate changes reflect a continually evolving market but will also ensure that the society can support all mortgage applications and maintain the levels of service expected of us, especially once our new 90 per cent LTV range launches on Monday.”
Lenders reviewing cladding form use after ‘negative effect on mortgage market’ – housing minister
Housing minister Christopher Pincher (pictured) admitted that lenders had been using the forms more often than originally intended and that borrowers trying to access the mortgage market may have suffered as a result.
He revealed that following a meeting with minister for building safety Lord Stephen Greenhalgh, lenders had agreed “a nuanced approach to risk” was required and to review their policies and advice to valuers.
The External Wall Fire Review (EWS1) process was originally designed by Barclays Mortgages head of valuations Fiona Haggett with the intention of solving the problem of valuing properties with external cladding and allowing occupiers to move again.
However, there have been issues implementing the system.
Valuers have been limited with many unable to obtain professional indemnity insurance (PII), viewings have been backlogged by many months in some cases, while MPs branded it “slow and expensive”.
‘Wider scope of buildings than intended’
The issue has been part of the ongoing attempts by government to help address national concerns following the Grenfell Tower fire three years ago and was again raised in Parliament this week.
Pincher was responding to a written question from Shabana Mahmood Labour MP for Birmingham, Ladywood, asking what assessment he had made of the EWS1 form on allowing leaseholders to sell properties.
Pincher said: “The government is aware that some lenders are requesting valuers use the EWS1 form on a wider scope of buildings than was intended and this may be having a negative effect on the mortgage market for such buildings.
“The minister for building safety held a roundtable with mortgage lenders, who agreed a nuanced approach to risk is required.
“They are reviewing their policies and guidance to valuers on the use of the form.”
Mortgage Solutions asked lender trade body UK Finance what changes would be made and when they would be implemented.
UK Finance said it was unable to comment on private meetings.
Discussing the issue of PII cover during the Flammable Cladding Removal debate in Parliament yesterday, Pincher also noted that meetings had been conducted to help tackle that problem.
“Lord Greenhalgh has met members of the insurance industry and other fire and safety professionals,” Pincher said.
“He is investigating, at pace, ways in which this particular issue may be remedied.”
Wales stamp duty cut excludes BTL and second homes
The move does not apply to additional properties including buy-to-let or second home purchases, unlike in England and Northern Ireland, but will end on 31 March.
The rates for higher rate residential or non-residential transactions are unchanged.
Around 80 per cent of homebuyers liable to the main rates of land transaction tax will not pay any tax with an average reduction of £2,450 per transaction, the government said.
It noted that the lower value reflected the nature of the housing market in Wales, where the average house price of £162,000 is considerably lower than the £248,000 in England.
First time buyers typically pay £139,000 in Wales, and £208,000 in England.
The move coincides with the full opening up of the housing market in Wales, which will also take place on 27 July, with viewings of occupied properties allowed to recommence.
A further £30m to support the construction of new social housing was also announced.
Finance Minister Rebecca Evans (pictured) said: “This tax holiday will help first time buyers as well as those selling to move on, but we are taking a different direction to support jobs and house building in Wales.
“While eliminating taxes for those that need extra help, the tax holiday rate also reduces the tax paid on more expensive properties to help the wider housing market.
“Under these changes more than three quarters of homebuyers will pay no tax at all, an increase of 20 per cent under our current measures,” she added.
Stamp duty discount cut off will not be a cliff edge – Treasury minister
Glen, who is economic secretary to the Treasury, also told the House of Commons that he was in discussions with lenders about bringing back more high loan to value (LTV) mortgages.
And financial secretary to the Treasury Jesse Norman rejected points from opposition MPs who noted analysis from the Institute for Fiscal Studies that the cut would disproportionately benefit landlords and second home buyers.
The comments were made during the second reading of the Stamp Duty Land Tax (Temporary Relief) Bill which will enact the temporary stamp duty cut announced by chancellor Rishi Sunak last week.
Transactions ‘substantially completed’
Craig Mackinlay, Conservative MP for South Thanet, asked Glen if the 31 March would be a cliff edge with transactions needed to be at point of exchange to be eligible for the nil rate of stamp duty.
“Is he not concerned about that cliff edge? For some people, for no reason of their own, late finishing of their property will mean they fall the wrong side, very expensively?” Mackinlay asked.
Glen replied: “We are in a situation where, if the transaction is substantially completed by 31 March, it will be able to qualify for the relief.”
Glen also acknowledged concerns from Conservative MP for Thirsk and Malton Kevin Hollinrake about the limited access to high LTV mortgages at present.
“He is right to say that there is a threat given the changes in the profile of LTV mortgages that are being offered,” Glen said.
“We hope that that will return to more of the normal schedule that we would have seen pre-pandemic.
“We will be actively looking at this, and I am in conversations with the banks and building societies about it,” he added.
First-time buyers losing out
Several MPs also questioned ministers about why the cut was not restricted to people only buying a first home or moving their permanent residence, but also included landlords and people buying additional properties.
Institute for Fiscal Studies analysis following Sunak’s announcement suggested first-time buyers would be left worse off by the move, while industry professionals told Mortgage Solutions it was a “huge opportunity” for landlords to expand their portfolios.
Siobhain McDonagh Labour MP for Mitcham and Morden asked if ministers recognised that it was more than a threat for first-time buyers?
“First-time buyers are queuing online for websites of lenders in an effort to get the small number of five per cent deposit mortgages,” she said.
“Providing more incentive to people who already own their own home or are part of the buy-to-let market effectively crowds out first-time buyers.”
Labour opposition whip Matt Western agreed, noting that there is an issue with the second homes sector.
“Previously, a second homeowner or buy-to-let landlord would have paid an additional three per cent stamp duty surcharge, which would translate into a figure of eight per cent, rather than five per cent,” he said.
“These changes mean that anyone looking to buy a second home at between £250,000 and £500,000 will pay just three per cent.”
He continued: “In the last 12 months, 34 per cent of all purchases were made by second home owners. That has to be a concern, because it affects the market to the detriment of first-time buyers.”
However, Glen argued: “I would look at it in terms of opening up the market, creating more churn and momentum that allows all participants to be able to get on the housing ladder.”
Summing up the debate Norman added: “It is quite untrue to suggest that the measure will disproportionately benefit second home owners.
“Although those buying second homes or buy-to-let properties will benefit, and make a very important economic contribution in so doing, they will continue to pay an additional three per cent on top of the standard stamp duty land tax rates.”
Hope Capital completes first AVM case; Catalyst accepts short form vals
Hope Capital has completed its first case using an automated valuation model (AVM) on a residential property in Kent which was purchased at auction.
As a result, the borrower needed access to funds quickly and a loan for £163,350 at 55 per cent loan to value (LTV) was issued within seven working days from enquiry to completion.
Synergy Commercial Finance advised on the loan and Hope worked directly with the borrower to speed the application process up.
Piotr Twaits, sales director for Synergy Commercial Finance, said his team had worked well with Hope Capital, and the lender had been able to deliver quickly when necessary.
Hope Capital CEO Jonathan Sealey (pictured) added: “Embracing this technology means we are able to complete loans much more quickly where necessary, without waiting for a full valuation.
“With Synergy, we also knew we were working with a trusted partner, and were able to progress the loan rapidly as a result.”
Meanwhile, Catalyst Property Finance is now accepting short form valuations.
These are available for residential properties in major cities with a value up to £500,000 nationally or £750,000 in London, with light refurbishment allowed.
Catalyst Property Finance head of credit Matt Gillon promised there would be further innovation from the lender.
“We are always looking for ways to improve our bridging finance proposition for our broker partners and their clients,” he said.
“We have a number of new improvement initiatives to announce in 2020 and into 2021; the first being the acceptance of short form valuations for suitable properties.”
He continued: “One of the benefits is that they speed up the loan application process, typically by two to three days, which is a huge advantage for those borrowers needing quick access to finance. What’s more, there’s a real cost saving for borrowers.”
Connect appoints two relationship managers
The pair will cover London and the South East, and the North of England respectively.
Emma Roberts (pictured) has joined from Positive Lending and will be supporting brokers in the North of England.
She has worked in specialist lending for ten years as a key account manager, having previously held positions at Fluent Monday and Santander.
Darren Fletcher will cover London and the South-East. He also has more than a decade in the industry and joined Connect for Intermediaries as lockdown was beginning,
Connect sales director Kevin Thomson said: “Over the past 12 months, we have achieved significant growth in the number of our ARs, as well as the number of brokers coming to us for our referral and packaging services.
“We are putting plans in place to grow the Connect network further and significantly over the next few months. We are therefore strengthening our relationship management team to ensure we can continue to provide the high level of support all brokers have come to expect from us.
“Darren and Emma will be valuable additions to the team and will continue Connect’s focus on adding as much value as possible to the brokers we work with.”
Banning tenants on housing benefits ruled illegal
The judgment follows almost two years of progress in the housing industry which has seen the practice become less tolerated.
In October 2018, Mortgage Solutions reported the case of landlord Helena McAleer who was told to evict her vulnerable tenant or pay £2,500 in early repayment charges by NatWest after the lender found out the tenant was claiming housing benefit.
This led to a nationwide campaign by McAleer and supported by Mortgage Solutions to end the discrimination from lenders that included demonstrations outside bank branches.
As a result, NatWest and many others including The Mortgage Lender and Pepper Money changed policies to permit letting of properties to housing benefit tenants.
However, some landlords and letting agents have maintained the ban on these tenants.
In the latest case heard at York County Court on 1 July, District Judge Victoria Mark ruled the practice was against the Equality Act 2010.
“Rejecting tenancy applications because the applicant is in receipt of housing benefit was unlawfully discriminating on the grounds of sex and disability,” she said.
It is the first time a case overseeing the discrimination of tenants receiving housing benefit has been heard by a UK court.
The case involved a single mother who in November 2018 was denied the opportunity to view a property in York because the letting agent had a blanket ban on accepting tenants receiving housing benefit.
This made her homeless and she was forced to move into a hostel with her children.
Backed by charity Shelter, she subsequently lodged a claim calling for a declaration on the lawfulness of the policy and for damages.
Since the case was lodged the agent has ended its practice admitting the policy was not justified.
In the ruling, District Judge Mark also ordered the letting agent to pay £3,500 of damages to the claimant and pay the legal costs.
Lenders may need to act
A spokeswoman for UK Finance told Mortgage Solutions that lenders would need to consider if any changes needed to be made to existing contracts.
“For some time, lenders have not placed restrictions on landlords letting to benefit claimants in new contracts, therefore any landlord wanting to let to benefit claimants will be able to find a lender that will allow this,” she said.
“It will be the responsibility of lenders to review their existing contracts in the light of this new ruling to identify if any amendments are required.”
Warning of legal action
Shelter said the case was “a clear warning to other landlords and letting agents that they risk legal action if they continue to bar housing benefit tenants from renting”.
A survey conducted by YouGov for Shelter found that 63 per cent of private landlords said they do not let, or prefer not to let, to people who receive housing benefit.
“Research done by Shelter shows that ‘No DSS’ policies put women and disabled people at a particular disadvantage because they are more likely to receive housing benefit,” it said.
“The ruling is a major blow to this unfair practice.”
Shelter solicitor Rose Arnall who led the case said the ruling clarified that discriminating against people in need of housing benefit was not just morally wrong, but also against the law.
“Shelter has been fighting ‘No DSS’ for nearly two years, and this win in the courts is what’s needed to end these discriminatory practices for good,” she said.
“This sends a huge signal to letting agents and landlords that they must end these practices and do so immediately.”
Shelter chief executive Polly Neate added that the momentous ruling “should be the nail in the coffin for ‘No DSS’ discrimination”.
She continued: “It will help give security and stability to people who unfairly struggle to find a place to live just because they receive housing benefit.”
Jane’s landmark case was supported by the Equality and Human Rights Commission, the Nationwide Foundation and barrister Tessa Buchanan at Garden Court Chambers.
No landlord should discriminate
Landlord trade body the National Residential Landlords Association (NRLA) backed the ruling, noting that landlords should not have blanket policies that discriminate against those in receipt of benefits.
NRLA policy director Chris Norris said: “No landlord should discriminate against tenants because they are in receipt of benefits.
“Every tenant’s circumstance is different and so they should be treated on a case by case basis based on their ability to sustain a tenancy.
“More broadly, the government can also support this work by ensuring benefits cover rents entirely. It should also convert the loans to cover the five-week wait for the first payment of Universal Credit into grants.”
Minister for rough sleeping and housing Luke Hall added: “Everyone should have the same opportunity when looking for a home and discriminating against someone simply because they receive benefits has no place in a modern housing market.
“That’s why we have been working with landlords and letting agents to help ensure prospective tenants are treated on an individual basis and that benefits are not seen as a barrier to giving someone a place to live.”