The extension of its tenancy criteria comes after the lender carried out several projects to gauge the needs of the landlord market.
One ongoing project involves monitoring the impact of limited company buy-to-let products on the market and has led to discussions with several distributors. But the lender said it did not have any immediate plans to launch into this sector.
This week BM launched its consumer buy-to-let proposition to comply with the requirements of the Mortgage Credit Directive (MCD).
To keep the majority of buy-to-let lending out of reach from European mortgage regulation a new category ‘consumer buy to let’ was created. To fall outside this category the buy-to-let borrower must be acting ‘wholly or predominately for the purposes of business’.
Alongside this BM has added several new fields to its application form to capture employed and self-employed income details and residential mortgages to assess landlords’ financial stability. In guidelines issued to brokers it stressed the importance of keying this information correctly, as applicants’ personal income was considered when a lending decision was made.
Doug Hall, director of specialist mortgage desk 3mc, said it was good news that a lender as large as BM had not dismissed the limited company buy-to-let market. “We need more lenders in that space going forward so this is a positive outcome for customers who intend to purchase in a limited company wrapper,” said Hall.
Hall said the extension of tenancy agreement terms would offer more choice to intermediaries when discussing investors’ requirements around the security of tenure. “Many landlords only want six to 12 month contracts for tenants but we do come across clients who want to offer longer agreements, for these landlords there is very limited choice.”
Phil Rickards, head of BM Solutions (pictured), said: “Change in the buy-to-let market is moving at a pace, and we understand the need to respond and adapt to this. Over the past 12 months we have invested a large amount of resource developing our consumer buy-to-let proposition which was launched this week. We have also made changes to our affordability criteria, to ensure that we continue to lend responsibly.”