The impact of lockdown on income and jobs, along with fears about university students paying rent, has impacted on some lenders’ mortgage offerings

Big-name lenders have ditched HMO and student let mortgage products amid uncertainty around coronavirus, the job market and student accommodation

Paragon has told investors it’s ‘not currently accepting applications on properties that are, or will be, let to students’ – in what it calls a temporary revision. A spokesman says: “We are committed to serving our buy-to-let mortgage customers. However, as a prudent lender, we have made some changes to criteria, including limiting maximum LTVs to 75% and temporarily suspending our activities in some areas, such as student lets, to ensure we focus on our core product offering.”

Meanwhile, The Mortgage Works isn’t offering HMO mortgages. A spokeswoman says: “We withdrew the HMO product range at the end of March due to physical valuation constraints during the lockdown. This proposition remains under review.”

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Fewer lenders have HMO products compared with earlier in the year, says Daniel Lee, principal of Legacy Financial Consultants, who tells LandlordZONE that he’s not processing many applications for HMOs or student lets. Says Lee: “From a bank’s point of view, they’re not confident about the ability of some tenants in HMOs to pay their rent in the current climate – they will often be the first to become unemployed. The student rental market has also been the most affected in the private rented sector by Covid and there’s uncertainty about where students will be studying next term, while some haven’t paid their rent.”

Lee says his HMO portfolio landlords aren’t interested in expanding their portfolio at the moment and that if a client now approached him looking for student lets he would ask them to think it through. “When a market leader pulls out, if affects the pricing. The lowest rate I can find on a two-year re-mortgage fixed rate 60% loan-to-value is 3.05% for a corporate client,” he adds. “When big names like TMW and Paragon pull out you need to sit up and take notice.”

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