BM Solutions changes lending criteria for Landlords

A day after the Budget announcement where George Osborne called on banks to increase lending to those involved in the housing sectors it was revealed that BM Solutions decided to loosen its lending criteria for buy-to-let landlords. This comes as good news as recently there have been a number of buy-to-let lenders who have stated that they will no longer offer lending to landlords who have tenants that receive housing benefits such as The Mortgage Works and Lloyds TSB.

Even though The Mortgage Works – which is the buy-to-let subsidiary of the building society Nationwide – later decided to overturn the decision, the fact that they wanted to restrict lending in the first place shows that lenders are becoming more wary of lending to those in the private rented sector. BM Solutions on the other hand has decided to extend their offerings and is now offering lending to student landlords with a maximum amount of five tenants on one shorthold tenancy agreement.

Currently, most lenders only lend to landlords with a maximum of four students per tenancy, however due to the housing crisis more students are now looking to live together in one property. A spokeswoman commented on the company’s decision and said: “We regularly review our lending policies and make changes when we feel it is necessary to do so. The private rental sector is playing an increasingly important role in supporting the demand for housing in the UK and as such we are taking the necessary steps to update our policies to support this.”

Meanwhile, the Buy to Let Business managing director Ying Tan, said: “By widening its criteria it will get more business and maintain margins still. If BM wants more business then you may find it will loosen criteria in other areas. This is turning the tap slightly without opening the floodgates.” Student landlords often find it difficult to secure lending due to the perception that students are risky tenants, which is landlords can also sometimes find it difficult to find cheap landlord insurance policies too. However, by letting a single property out to five tenants, landlords can also find that they will gain high yields, meaning that it can balance out in the end.

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