The UK’s biggest buy-to-let lender by lending volumes, BM Solutions, has dropped its restriction on lending to landlords with tenants who are on housing benefits.
BM Solutions, Lloyds Banking Group’s buy-to-let lending subsidiary, has never lent to landlords who wish to house tenants on housing benefits.
However, Mortgage Strategy can reveal that the Lloyds Banking Group buy-to-let lending subsidiary will lend to landlords with these types of tenant from today.
A BM spokeswoman says: “Recognising the increasingly important role buy-to-let has in meeting housing demand, we have reviewed our current policy relating to tenants receiving housing benefits and its impact on our lending decision.
“We can confirm that we are updating our policy. From today, this condition will not be enforced on new or existing mortgages.”
The news comes less than two weeks after its biggest competitor in the buy-to-let market, Nationwide Building Society lending subsidiary The Mortgage Works, had U-turned on its decision to lend to these types of landlords.
Last month, Money Marketing revealed TMW’s decision to stop lending to landlords with tenants on benefits. Prior to this the lender would lend on a case-by-case basis. However, TMW reversed its decision to stop lending to these borrowers within three days of Mortgage Strategy first breaking the news.
Other lenders which will consider tenants on housing benefits include Aldermore Commercial, Manchester Building Society and Paragon and Mortgage Trust.
In January, Money Marketing’s sister publication Mortgage Strategy reported that Lloyds Banking Group has aggressive buy-to-let lending targets for 2013, with it rumoured to be planning to increase buy-to-let as a proportion of lending to around 21 per cent compared to 17 per cent in 2012.
At the halfway stage of 2012, Lloyds had lent around £12.3bn in total, with around £2bn of that being buy-to-let business, giving BM Solutions a 26.3 per cent of the buy-to-let market in the first half of last year.
By comparison, TMW had a 20 per cent share of the buy-to-let market at the end of the third quarter of last year.