CHL Mortgages reduces rates; Precise Mortgages releases larger loan products and raises LTV
The five-year fixed option for individuals and limited companies will now begin at 3.10 per cent, down from 3.25 per cent.
Its two-year fixed deal for individuals and limited companies now stands at 3.15 per cent, a decrease from 3.30 per cent, and the five-year fixed rate with a one per cent arrangement fee has gone from 3.45 per cent to 3.30 per cent.
Its two-year fixed product for houses in multiple occupation (HMO) and multi-unit freehold block (MUFB) borrowing will start from 3.39 per cent, a reduction of 0.15 per cent.
The lender’s five-year fixed rate for HMO and MUFB at 75 per cent LTV has decreased from 3.64 per cent to 3.48 per cent.
Its five-year fix for HMO and MUFB borrowers at 75 per cent LTV with a one per cent arrangement fee is now priced at 3.68 per cent.
The lender has also reduced the arrangement fee for its five-year fix for individuals and limited companies at 65 per cent LTV to one per cent.
The interest coverage ratio will start at 125 per cent of the mortgage payment and is calculated at payrate for all five-year fixed purchase and remortgage products.
CHL Mortgages’ commercial director Ross Turrell (pictured) said: “We’ve seen positive movement in the markets with long-term swap rates improving and so have moved quickly to pass these savings onto landlords through our intermediary partners.
“The buy-to-let marketplace is hugely competitive and it’s important to outline our product and service values on an ongoing basis. Passing on these savings – alongside no loading on our valuation fees – demonstrates our commitment to promoting transparency throughout our proposition. Attributes we will continue to build on in H2 2021.”
Precise Mortgages brings in larger loan products and raises BTL limits
Precise Mortgages has reintroduced its maximum 80 per cent LTV limit to buy-to-let lending and brought out a pair of limited edition larger loan products.
The 80 per cent LTV limit applies to two and five-year fixed mortgages, with rates starting from 3.79 per cent, a two per cent product fee and a refund of valuation fee.
The lender has also brought out two limited edition five-year fixed products aimed at customers searching for larger loan sizes.
Rates start at 3.34 per cent and a product fee of £1,995 is applicable for loans between £200,000 and £500,000. The fee for loans between £500,000 and £1m stands at 0.5 per cent.
The BTL range also permits top slicing on personal ownership, limited company, portfolio and HMO applicants, which allows them to use surplus portfolio or disposable income as proof of resilience against financial stress.
Precise Mortgages also allows landlords up to 20 BTL mortgages with a combined value of £10m.
Precise Mortgages’ group sales director Adrian Moloney said: “As a leading specialist lender, we’re pleased to reintroduce up to 80 per cent buy-to-let LTV limits which are designed to offer increased product choice for landlords.
“We’re also pleased to be able to support the larger loan market by offering landlords a choice between a fixed fee product for loans up to £500,000, which may appeal to those with a limited company set-up, or a low percentage fee product for loans up to £1m.”
Landbay cuts rates and launches large loan deal
The large loan mortgage has a maximum loan size of £2m. A five-year fixed rate is available up to 65 per cent loan to value priced at 3.24 per cent and comes with a cashback option.
The green mortgage rates have been cut by up to 0.14 per cent and now start at 3.24 per cent.
Landbay has also introduced multi-unit freehold block (MUFBs) mortgages for first-time landlords starting from 3.49 per cent. This joins the new HMO products for first-time landlords that Landbay launched last week.
Paul Brett (pictured), Landbay’s managing director, intermediaries, said: “We constantly look to revise our range to make sure that it is highly competitive across every type of specialist buy-to-let mortgage. With our new competitive green products, plus MUFB and HMO mortgages for first-time landlords, as well as an attractive standard and new-build range, we believe that we have something for every landlord.”
Masthaven launches limited edition BTL products; Landbay brings out HMO products
The lender will offer loan sizes between £40,000 and £1m at 65 and 70 per cent LTV and the maximum loan value for 75 per cent LTV is £600,000.
The products are available on both two-year fixed rates and five-year fixed rates with a reversion rate of 5.5 per cent.
The two-year fixed rate deal at 65 per cent LTV has a rate of 2.75 per cent, and its two-year fixed at 70 and 75 per cent LTV has a rate of 2.79 per cent. The products are also subject to a lender fee of 1.5 per cent.
The lender is also offering a two-year fixed product with a fee of £1,995 at 70 and 75 per cent LTV, which has a rate of 3.19 per cent.
The five-year fixed at 65 per cent LTV has a rate of 3.09 per cent and at 70 and 75 per cent LTV has a rate of 3.14 per cent. The products are also subject to a lender fee of 1.5 per cent.
Its five-year fixed rate with a lender fee of £1,995, available at 70 and 75 per cent LTV, has a rate of 3.44 per cent.
The two-year fixed rate products are subject to early repayment charges (ERCs) of three per cent in the first year and two per cent in the subsequent year.
For the five-year fixed products, ERCs begin at five per cent, declining by one percentage point incrementally for each year of the fixed period.
The products are available for corporate tenants, individual or professional landlords, limited companies, houses of multiple occupancy (HMO) and student accommodation. Other features include no credit scoring and unlimited gifted deposits and equity.
Landbay brings in two products for first-time HMO landlords
Landbay has released two products for first-time landlords lending against houses in multiple occupancy (HMOs).
The products are available for properties with up to six bedrooms and also includes new-build properties.
The lender said that the new products were in response to broker feedback, who reported increased enquiries from first-time landlords regarding HMOs due to the higher yield.
The two-year fixed rate product has a rate of 3.49 per cent and the five-year fixed has a rate of 3.79 per cent. Both products have are available up to 70 per cent LTV and are subject to 1.5 per cent fee.
Paul Brett, managing director, intermediaries at Landbay, said: “Landlords are becoming more sophisticated and they understand the responsibilities of managing an HMO. They have done their homework and know the yields on HMOs are much higher than single flats or houses resulting in greater financial rewards.
“There is also more demand for living in HMOs, particularly from young professionals who want or need to share a house. Some simply can’t afford to rent their own place but many actually like communal living. Much of the HMO accommodation is far better quality than it used to be and can demand a higher rent.”
Fleet Mortgages brings in 80 per cent LTV options and reduces rates
The 80 per cent LTV products are available both as a two and five-year fixed rate and standard and limited company borrowers are eligible.
The two-year fixed product has a rate of 3.89 per cent and comes with a rental calculation of 125 per cent at 5.5 per cent, whilst the five-year fixed has a rate of 4.15 per cent and a rental calculation of 125 per cent at payrate. They both come with a two per cent fee.
The lender has also cut a range of its two-year fixed rate and five-year fixed rate products for standard and limited company products as well as houses of multiple occupancy (HMO) and multi-unit block products.
Its two-year fixed rate product for standard and limited company landlord borrowers up to 65 per cent LTV has been reduced from 3.04 per cent to 2.99 per cent.
Its equivalent products at 70 and 75 per cent LTV has been cut by 0.1 per cent to 3.14 per cent and 3.24 per cent respectively.
The lender’s two-year fixed deal for HMO and multi-unit borrowers at 70 per cent LTV has decreased by 0.05 per cent to 3.49 per cent, whilst at 75 per cent LTV the rate has fallen by 0.15 per cent to 3.54 per cent.
All the above two-year fixed rates come with a 1.5 per cent fee and rental calculation of 125 per cent at 5.5 per cent.
The lender’s five-year fixed rate for standard and limited company borrowers at 65 per cent LTV has been cut by 0.15 per cent to 3.29 per cent and for 75 per cent LTV it has been reduced by 0.1 per cent to 3.39 per cent.
The standard products are subject to 1.5 per cent fee and the limited company products have a fee of 1.75 per cent, and the rental calculation is 125 per cent at payrate.
The lender’s five-year fixed rate products for HMO and multi-unit block borrowers at 65 per cent LTV has fallen from 3.59 per cent to 3.53 per cent, whilst for 75 per cent LTV it has decreased from 3.79 per cent to 3.73 per cent. They both come with a 1.5 per cent fee and a rental calculation of 125 per cent at payrate.
Fleet Mortgages chief commercial officer Steve Cox said the first half of the year had been busy in the landlord space, and the lender expected the trend to continue to the end of the partial stamp duty holiday and beyond.
He also noted there could also be heightened remortgaging by landlords so they can secure equity for further purchases.
“We’re catering for those landlords who can see the real opportunities property investment delivers in the UK, and these new products and the rate cuts provide them with an excellent source of finance, with competitive pricing via a highly-experienced specialist lending team,” Cox added.
Shawbrook splits HMO and BTL deals into loan size bands
The bandings are; loans of less than £150,000, loans between £150,000 and £1m and loans over £1m.
Rates on loans over £1m have been reduced and will now start from 4.14 per cent on buy to lets and HMO properties valued at 65 per cent loan to value.
Gavin Seaholme, (pictured) head of sales at Shawbrook Bank’s property finance division, said: “These changes underline Shawbrook’s continued commitment to supporting the simple, the complex, and everything in-between.
“Our team have a wealth of experience lending on commercial and residential developments, in even the most complex of situations and work hard to serve customers at both ends of the market. By offering competitive rates across all loan sizes we can make our expertise and knowledge of the market accessible to as many people as possible.”
HMOs have added value but first-timers need their eyes wide open – Moloney
According to the latest research by BVA BDRC, HMOs continue to generate significantly higher average rental yields compared to other property types – seven per cent compared to the overall average rental yield of 5.8 per cent.
When you factor in the added peace of mind that comes with knowing that if one tenant moves out there is less exposure to arrears, it’s no surprise they are proving so appealing to clients looking to maximise their investments.
And it is not just experienced landlords with years of rental know-how behind them; HMOs are also attracting the attention of investors looking to take their first steps in the buy-to-let market.
As with any financial investment, however, there are downsides as well as upsides.
Managing HMOs can be challenging, and first-time buyers in particular should only go into an arrangement with their eyes wide open.
Many people believe a property only becomes an HMO when five or more people forming more than one household are living it.
Not only is that incorrect, it could potentially have very costly consequences for landlords. A property is actually classified as an HMO when it’s occupied by at least three unrelated tenants forming more than one household who share toilet, bathroom or kitchen facilities.
While HMOs with five or more unrelated people are subject to mandatory licensing with all local authorities, some councils insist on landlords with fewer residents obtaining a licence.
Landlords failing to apply for a licence when one is required could face a fine of up to £20,000, plus costs.
Adding up the costs
The costs associated with running an HMO can be higher compared with a traditional single let property too.
Start-up costs can mount up if conversion work needs to be carried out or furniture needs to be purchased, while running costs for letting agents, utilities and maintenance can soon eat away into those much vaunted potential higher rental yields.
Finding the right HMO mortgage
Finally, aspiring first-time HMO landlords might find their choice is more limited when it comes to securing the finance they need.
Their complex nature can mean there is often more work in managing HMO properties, resulting in some lenders being more cautious as a result. Many lenders will insist on some form of letting experience before they will lend to someone buying an HMO.
So if you’re approached by a client who still wants to purchase a house in multiple occupation but who doesn’t have any previous buy-to-let experience, would you know where to turn?
There are lenders out there who can support both you and your client every step of the way.
As some doors shut in certain areas of the buy-to-let market, different ones are opening up.
Foundation cuts rates and launches limited company and short-term let products
The limited edition limited company product is available up to 75 per cent loan to value (LTV) and priced at 3.24 per cent, 10 basis points below Foundation’s core limited company range.
It has a reduced 1.5 per cent fee, an interest coverage ratio (ICR) calculated at 125 per cent of pay rate and a maximum loan amount of £1m.
There is no maximum to the background portfolio size, but a maximum of £3m is allowed with Foundation.
The new short-term let products are a pair of two-year discount variable products at 65 per cent and 75 per cent LTV.
They have discounts of 1.6 per cent and 1.2 per cent giving respective pay rates of 3.49 per cent and 3.89 per cent.
Foundation has also cut rates on current short-term let products, reducing its five-year fix at 65 per cent LTV to 3.99 per cent from 4.19 per cent and the 75 per cent LTV version to 4.29 per cent from 4.79 per cent.
Meanwhile, a series of rate cuts has also been made across a number of its buy-to-let products.
From its standard property F2 range for borrowers with some credit blips, the two-year fixes at 65 and 75 per cent LTV have been reduced by five basis points (bps) to 3.19 per cent and 3.34 per cent respectively.
The five-year F2 versions have been trimmed to 3.39 per cent and 3.54 per cent respectively.
The F2 houses in multiple occupation (HMO) five-year fix at 65 and 75 per cent LTV down 10bps to 3.49 per cent and 3.64 per cent respectively.
All the deals mentioned have a two per cent fee.
George Gee, commercial director at Foundation Home Loans, noted the Budget had resulted in increased activity, particularly from landlords.
“Landlords continue to seek out properties that can deliver strong yield – hence the focus on HMO and short-term lets,” he said.
“And as a lender active in these areas we want to ensure advisers and their clients have access to a highly competitive range, right across the buy-to-let product space.”
HMOs could see boost from post-Covid lifestyle changes – Oliver
The first thing to note is that when it comes to Covid-19, according to government guidance, HMOs are considered no greater risk than a single household.
Habitants are asked to follow the general guidance on staying at home and behave in the same way as a single household if someone has symptoms of coronavirus. The only additional guidance is that it is recommended all shared areas are cleaned regularly and kept well ventilated.
So, as we emerge from the pandemic, it is unlikely HMOs will be tarnished by any particular stigma and there could even be a surge in demand.
Student accommodation accounts for a lot of HMOs and, with many courses being run remotely at the moment, it’s likely that a lot of people are holding off on going to university until they can fully appreciate the full student experience.
This means pent-up demand for university places when restrictions do start to loosen, and increased demand for HMO accommodation.
In addition, HMOs provide an important form of affordable housing, and affordable housing will be needed by many workers who have suffered unemployment and a drop in income as a result of the financial fallout of the pandemic.
On top of this, while an increase in home working has driven an exodus from cities, when offices do re-open people are likely to be required to attend them, even if just for a couple of days a week.
A space in an HMO could therefore provide a flexible and affordable away for office workers to balance their new lifestyle with commitments in the city.
There are signs, therefore, that HMO accommodation will continue to attract renters and there could even be a shift to more upmarket properties if there is an emerging trend for office workers to take on HMO crash pads.
Investors buying a property with the intention of letting it as an HMO will usually need to carry out some work to make the property fit for purpose, and bridge-to-let products could help them to establish a successful investment for the future.
The initial bridging loan can be used to purchase the property and carry out the work, before switching it to a longer-term mortgage when the work has been completed and the building is ready for tenants.
HMOs provide a flexible and affordable form of accommodation that will be key to their ongoing popularity.
Vida slashes buy-to-let rates by up to 40bps
Rates within its Vida 1 homes in multiple occupancy (HMO) and multi-unit blocks (MUB) range start from 3.29 per cent for a two-year fixed mortgage at 70 per cent loan to value (LTV), reduced from 3.69 per cent.
In the same range, the five-year fixed at 70 per cent LTV has been cut by 30 basis points (bps) to 3.69 per cent.
Elsewhere, the core two-year fixed buy-to-let mortgage at 70 per cent LTV has a rate of 2.89 per cent while the five-year fixed alternative is set to 3.29 per cent following a 0.1 per cent reduction on both.
For ex-pat borrowers, rates have been reduced by five bps. This includes the two-year fixed at 70 per cent which now has a rate of 3.59 per cent and the five-year fixed option with a rate of 3.89 per cent.
Louisa Sedgwick (pictured), managing director of mortgages at Vida, said: “Britain’s private rented sector plays a critical role for millions of people across the UK, but just like many others, landlords have not been immune from economic impact of Covid-19.
“A strong specialist lending sector that offers competitive rates and innovative solutions has therefore never been more important. Our rate changes today means we are able to provide landlords with greater choice and flexibility so that they can continue to provide housing for those who need or want to rent.”
Slum landlord ordered to repay £739,000 in illegal rent
The confiscation order for £739,263.58 was handed to Mohammed Mehdi Ali of High Road, Willesden, following an investigation by Brent Council that revealed he had illegally converted properties he and his father owned into Houses in Multiple Occupation (HMO).
A councillor leading the Brent planning team described the conditions in the properties as “horrible” and said it was some of “worst residential accommodation” planning officers had ever seen.
According to the Guardian, up to 15 people were living in some of the homes. In one property a family of four were living in one room, a family of three in another room and three single men shared another. Many of the tenants had come from eastern Europe and Brazil.
Ali’s father had been served an earlier confiscation order for £544,000 when in 2014 he was found to have earned money from illegal rental homes, two of which were the same properties included in this investigation. Salah Mahdi Ali was found to have converted four homes into 38 flats without consent.
The order was made under the Proceeds of Crime Act 2002 in Harrow Crown Court in February and sentencing was scheduled to take place this week. He was found guilty of failing to comply with planning enforcement notices in April 2018.
Ali was told by the court that he would face a prison term of five years and nine months if he did not pay the order in full within three months.
He was also ordered to pay Brent council £30,000.00 to cover legal costs.
Cllr Shama Tatler, lead member for regeneration, property and planning, said: “This is another huge win for Brent. The council will take robust action to prevent the creation of poor quality housing.
“This penalty sends a clear message that rogue landlords will not be allowed to get away with ignoring planning laws. The accommodation provided was some of the worst residential accommodation that officers have ever come across.
“Brent will not tolerate this type of behaviour, landlords providing such horrible conditions. Brent residents deserve better.”