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TMW move could alienate B2L brokers

The Mortgage Works’ decision to not accept applications for buy-to-let mortgages on new-build properties has sparked fears it could alienate specialist brokers and affect the buy-to-let market.

TMW’s decision to only accept buy-to-let applications on properties over one year old has been met with a mixed response in the industry, with worries that other lenders may follow suit.

Rob Clifford, managing director of mortgageforce, says there is no question that a lot of buy-to-let applications are carried out on new properties because of low maintenance needs, and in some cases the locations are more attractive to tenants.

He says: “If TMW leads the way and other lenders follow it could have an impact on the buy-to-let market and business levels for brokers who specialise in buy-to-let.

“But I think whenever a lender adopts a policy against a sector there will generally be other lenders that decide to specialise in that area.”

TMW says it has taken the decision because of the over-supply of newly built property, which is making valuations in the sector more difficult.

But John Heron, managing director of Paragon, says he sees no reason why a valuation cannot be made on a newly built buy-to-let property as long as the correct checks are carried out.

He says: “It is certainly more difficult to value new properties but surveyors should be capable of doing this as long as they take into account all the variables. In particular, you need to establish clearly the level of owner-occupier demand and have a firm idea of the rental prospects.

“It is of course crucial that the capital and rental value you lend against are realistic and achievable. As long as you can establish this and you have a good quality credit risk there should be no reason not to lend.”

Matthew Wyles, group development director at Portman, says: “Some developers are now prepared to do deals on price outside of the formal contract.

“In these cases the lender may be unaware of the actual price being paid and end up relying on a valuation which might in turn be based on erroneous assumptions.”

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