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BM Solutions U-turns on FTB lending over ‘gaming’ fears

Buy-to-let lender BM Solutions has reversed its decision to lend to first-time buyers after only one month over fears that borrowers were attempting to “game” buy-to-let loans.

Last month BM Solutions, part of Lloyds Banking Group, loosened its criteria for first-time buyers. The move allowed these borrowers to take out a buy-to-let loan as long as one of the named applicants owned a property they also lived in.

But the lender has now decided to reverse this policy.

BM Solutions head of sales Phil Rickards says: “The decision was made some time ago to relax the criteria and open buy-to-let to a wider audience. Now we have implemented it, the risk of somebody staying in the property looks greater than we first thought.

“We are doing our part to make sure we lend responsibly and to reduce the risk of gaming.”

Lenders have previously raised concerns about the prospect of borrowers gaming buy-to-let, where applicants look to evade stricter affordability rules under the MMR by taking out a buy-to-let loan and then living in the property. The buy-to-let market, unlike the residential mortgage market, is unregulated.

A poll of 382 brokers carried out by Money Marketing sister publication Mortgage Strategy last month revealed that 53 per cent of brokers have had a client who has attempted to take out a buy-to-let loan and then live in the property.

Coreco director Andrew Montlake says: “Gaming is an issue and will continue to be so for a while until the message gets out that this is something serious and clients are taking an awful risk in trying to do this.

“Clients do not think they are doing anything wrong, which is part of the issue. They are not even telling the broker. We all have to be vigilant and ask a few more questions around that.” 

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