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Accord buy-to-let criteria under review as it eyes first-time landlords

  • 10/02/2016
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Accord buy-to-let criteria under review as it eyes first-time landlords
Accord Mortgages is looking at a number of changes to its buy-to-let proposition in response to looming tax implications for landlords, which include a 3% Stamp Duty premium on second properties and cuts to mortgage interest relief.

Chris Maggs, commercial manager at Accord, said it was considering lending to first-time landlords, while also bringing its minimum property value, which is currently set at £100,000, more in line with the rest of the market.

He said: “There are various aspects of our proposition that limits us to certain sectors of the market, so we would say our proposition currently plays to about 35 to 40% of landlords. We are looking at widening that proposition to deliver the kind of lending volumes we would like to achieve.

“We’re probably one of the only lenders not offering deals to first-time landlords and we’re looking to enter that space at some point this year.”

Maggs added that the lender was also revisiting its rental calculations for landlords, following the surprise Budget announcement that mortgage interest relief would be scrapped to the basic rate from 2017.

Accord hiked the interest rate on its rental calculation in July last year from 125% of 5% to 125% of 5.24%.

Maggs said: “We are in the process of revisiting our rental calculations because the tax relief changes are going to impact the affordability of a landlord and the whole model quite considerably.

“There’s a lot of visibility around lenders’ rental calculations at the moment so we need to make sure that’s fit for purpose in an increasing interest rate environment.”

In a further blow to landlords last year, George Osborne announced during his Autumn Statement that buyers purchasing second properties would be subject to a 3% premium on their Stamp Duty costs.

The government has proposed an exemption for landlords with 15 properties or more, but the details of the exemption are still unclear and are expected to be announced in the March Budget.

Maggs confirmed Accord was awaiting details in the Budget next month to make a decision on whether to raise its lending limit above the current 15 property allowance.

“One of our fundamental principles when we came to market in 2012 was that we were aimed at a proposition of experienced landlords but not those that were making a full-time living out of that, which is why we capped our limit to 15 properties,” he added.

“If there is a 15 property exemption, once we find out how that will work then we will firmly put in our plans to look at widening that.”

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