In a change of policy at Natwest Intermediary Solutions, the bank will introduce changes to its buy-to-let criteria from 11th September which will enable its brokers to target professional landlords, widening its appeal in the buy-to-let market.
The bank, which took such a clobbering with its commercial property loans in the property crash, and seeking a government bail-out to survive, now, it seems, wants to be a serious contender in the residential buy-to-let mortgage market.
Most mortgage lenders post the “credit crunch” have targeted “consumer” landlords, the vast majority of the buy-to-let small-scale landlords with just one or two properties to let. Natwest’s change of policy, by lifting its previous restrictions, will enable its brokers to sell mortgages to “professional” landlords wanting to expand their portfolios further.
Natwest defines professional landlords as those who derive more than 30 per cent of their income from rental properties. It will now consider applications from customers who fall into this category and will also remove its previous maximum loan limit of £500,000.
This new criteria will be applied to all new applications received from the 12th of September onwards, so long as all other criteria remaining the same. The Natwest rental cover calculation will remain as before at 125 per cent times 5.5 per cent.
Acting head of sales at the Natwest intermediary arm (Natwest Intermediary Solutions), Paul Kane told the Financial Times (FT) that over the last 18 months the lender has made various improvements to grow its presence in this sector.
“The introduction of our new criteria means that we can now welcome applications from “professional” landlords, which is something that many brokers have been crying out for”, he said.
Justifying the bank’s move, Kane pointed out that the buy-to-let market had grown significantly over the last six years. Accounting for only 5 per cent of all UK gross lending in 2009, it now accounts for 15 per cent of the lending market in 2015. Clearly, no bank worth its salt can be out of this, the fastest growing segment of the mortgage market in the UK.
“The changes we are introducing, combined with the recent rate cuts we made across our portfolio, mean we have a really strong proposition for mortgage intermediaries who are serious about this market.”, says Kane.
Contrary to previous policy, Natwest Intermediary Solutions updated its criteria earlier in the summer to consider buy-to-let mortgage applications for properties where a ‘selective licensing scheme’ is in place.
A selective licensing scheme is where local authorities feel it necessary to implement licensing for landlords in the area because there are social problems and to improve the quality of private rented homes.
— LandlordZONE (@LandlordZONE) September 25, 2015