The BTL criteria enhancements will give brokers and landlords “further flexibility” and cater to growing demand for social housing.
Foundation Home Loans explained that for landlords, letting to housing associations or local authorities has several advantages, including predictable income streams, a reduced risk of rental voids, and the added reassurance of tenant vetting and inspections handled by the provider.
Lease agreements can also be up to five years, giving more consistent income and stability.
To be eligible in England and Wales, the housing association or local authority must appear on the government’s register of social housing providers and not be a charitable organisation.
In Scotland, the housing association or local authority must appear on the Scottish Housing Regulator register, with landlord type ‘local authority’ or ‘Registered Society – non charitable’ and be listed as ‘Compliant’.
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The maximum lease agreement is 60 months, and onward tenancy agreements between the housing associations or local authorities and tenants must not exceed 36 months.
A maximum loan size of £3m applies and the lender will not accept houses of multiple occupation (HMOs), supported accommodation, assisted living or sheltered housing, hostels, nursing homes or care homes.
Rental assessment is calculated on the lowest of contractual or open market rent, with suitable break and make good clauses required in tenancy agreements.
Tom Jacob, director of product and marketing at Foundation Home Loans, said: “At Foundation, we are always looking for ways to broaden the opportunities available to brokers and their landlord clients. Accepting lettings to housing associations and local authority tenants is a natural step that supports landlords in achieving secure, predictable returns, while also helping to meet the critical demand for affordable housing.
“We want brokers to see us as their first choice for a wide variety of buy-to-let cases, whether that’s standard private rentals, more complex HMO or MUFB lending, and now, social housing arrangements. With a clear process, minimal extra documentation, and support from our regional account managers, we’ve ensured this new option can be accessed by brokers with confidence.”
Foundation Home Loans recently increased the maximum loan to value (LTV) in its core BTL range to 85%.
