Let’s start with the good news and then move on to the bad.
It is great to see some of the criteria for self-employed borrowers starting to improve from the likes of both Aldermore and Ipswich Building Society.
In a further sign of better times to come for this long-underserved part of the market, some argue that the tougher environment for buy-to-let lenders could actually boost the outlook for freelancer and contractor borrowers. Older customers may also have cause to celebrate (as long as they are not landlords).
In his column this week, Stonebridge director Paul Nye says that, as buy-to-let lenders diversify their offering to cope with expected shrinkage in their core market, they are likely to focus on ‘complex prime’, which includes categories such as the self-employed, contractors and those needing to borrow into later life. Given that the numbers of people working for themselves have been increasing steadily and look likely to continue in this vein, it would be good to see the mortgage market grow to meet this need.
Elsewhere in the housing sector there are more worrying trends. There is controversy over the practice of housebuilders selling on freeholds to investment companies that ratchet up ground rent for homeowners, sometimes doubling the annual charge every 10 years. What is more, housebuilders are often selling new-build houses as leasehold properties, and not just flats.
The sad fact is that many of these homes have been bought by first-time buyers under schemes such as the Government’s Help to Buy initiative. This practice could seriously undermine the value of the programme, leaving unwitting homeowners in an affordability trap.
Housing minister Gavin Barwell has signalled his intention to tackle the issue, so we hope he takes steps to stamp it out in the impending white paper.
Adding a further cloud to the silver lining at the start of this column is the news that Santander has a clause in its buy-to-let mortgage contracts that calls on landlords to increase rents by as much as they reasonably can as often as they can. Landlords often get a bad rap, but maybe lenders should take more of the blame. This follows accusations that lenders are also blocking longer-term tenancies, which the CML refutes.
As always, we welcome your views and personal experience of cases such as this.