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TMW ups minimum leasehold term and refreshes HMO criteria

  • 21/03/2016
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TMW ups minimum leasehold term and refreshes HMO criteria
From Thursday this week, Nationwide’s buy-to-let arm TMW will extend its minimum lease term from 55 to 70 years at application.

The mutual has also made several changes to its Houses in Multiple Occupation (HMO) criteria, including a maximum of seven lettable rooms, down from nine.

The lender has also lifted the minimum property value to £100,000 from £50,000 on HMOs but the criteria remains unchanged at £50,000 on buy to let and let to buy.

A spokeswoman said: “TMW has implemented changes to lending on leasehold properties to address the issue of short leases and their effect on the saleability and hence value of the properties on which we lend. The evidence shows that the decrease in property value accelerates once the lease falls below 55 years, and the cost of extending the lease increases as the term erodes. Extending the minimum lease term to 70 years will help to address this issue and brings us into line with the market as a whole.

“The changes to lending on HMOs, limiting the number of lettable rooms to seven and introducing a minimum property value of £100,000, is to minimise the risk of lending on non-residential properties and those of poorer quality.”

Nationwide also made several criteria changes in February heading back into the restricted resale market and also offering porting online for existing customers through intermediaries.

Nationwide has also introduced a ‘genuine bargain price lending’ option for transactions where homeowners wish to sell their properties at less than the open market value.

In mid-February, Nationwide reported gross mortgage lending up 16% to £23.6bn in the nine months to 31 December, helping to push its market share up from 13% to 13.5% against last year.

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