BM Solutions has loosened its criteria once again by agreeing to lend for the first time to landlords who let properties to students.
From today, the buy-to-let lender will lend to landlords renting to students where there is a maximum number of five tenants on one assured shorthold tenancy agreement, in line with its current lending policy. Previously, it would not lend to these types of landlords. However, it will not lend on houses in multiple occupation, as was the case before.
The news comes just over a week after Mortgage Strategy revealed the Lloyds Banking Group subsidiary had followed its biggest rival, The Mortgage Works, in dropping its restriction on lending to landlords with tenants who are on housing benefits.
A BM Solutions spokeswoman says: “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.”
Other lenders which will lend to landlords with student tenants include The Mortgage Works, Godiva, Abbey for Intermediaries, Woolwich, Aldermore and Virgin Money.
In January, 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. At the time, the lender would not say what it hoped to lend in 2013, only that it expected to increase gross lending.
Lloyds restricted its buy-to-let criteria in 2010 when it introduced criteria restrictions such as a maximum of three buy-to-let properties per customer.
The Buy to Let Business managing director Ying Tan believes this most recent criteria change, along with its decision to drop its restriction on lending to landlords with housing benefit tenants, is proof that Lloyds is chasing more business.
He says: “This does seem to back up the news that BM is looking to drive more business via criteria rather than rate. 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.”