Speaking as part of a podcast series, Neil Cadwallader, business development manager (BDM) at Family Building Society, said that as house prices are starting to fall, professional landlords are seeing buying opportunities.
“We’re starting to see older portfolio landlords who probably hold their portfolios in their personal name, so they don’t get the tax benefits, they are basically gifting their equity – which we’re quite happy to take in Family Building Society – to their younger family members, normally into [a] special purpose vehicle (SPV) limited company, because they’re going to be holding the chalice and running with it.
“So the BTL properties are not leaving the market anymore, they’re just changing to more tax beneficial status but within the professional landlord community,” he said.
Stuart Heavens, BDM for the South Coast, said the BTL market will “always survive” because there will “always be demand” for rental properties.
He noted that a key area of opportunity would be houses in multiple occupation (HMOs), which the lender recently entered, covering small HMOs, limited company BTL as well as expat BTL.
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Key BTL criteria
When asked about what criteria set Family Building Society apart, Heavens said it had no minimum income requirement.
“Our primary concern is could they cover rental voids, so if their only source of income is from rental and they have no other income in the background, is their portfolio sufficient to cover rental voids for a period of three months or so? Or do they have savings? Do they have investments? Do they have wealth they could cover rental voids with?” he said.
Heavens added that Family Building Society had no maximum number of properties in the background portfolio.
“Professional and serious landlords can look at coming to us, and we won’t stress their background portfolio. We only look at whether it’s self-financing in its own right,” he added.
On the expat side, Family Building Society can accept applications from over 40 countries, including ones from the EU, which Heavens said high street lenders “generally don’t like… lending to”.
For limited companies, the mutual doesn’t require personal guarantees below 65% loan to value (LTV), and for multi-unit blocks (MUBs), it will allow houses converted into two or three flats on standard products.
It has also increased the maximum LTV to 75% to “support the top end of the market” and reduced its interest coverage ratio (ICR) for limited companies to 125%, along with rolling out HMOs to expat borrowers.
