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Buy-to-letwatch – – David Whittaker – March 2012

I share this column with Ying Tan, managing director of The Buy-to-Let Business, and I don’t know if he has the ear of a higher being, but his call for lenders to increase their loan amounts in his last column on March 5 has reaped rewards, to say the least.

Less than 72 hours after his column went live, BM Solutions enhanced its buy-to-let range with six new products, four with loan amounts up to £1m at 75% LTV.

The sting in the tail is the 3% fee. But the lender also launched a couple of two-year fixed rates up to £500,000 at 75% LTV and a flat fee of £1,995. The rates are at 4.99%, if investors agree to use BM Solutions’ conveyance service, and 5.15% respectively.

These mortgages start to make sense for investors looking for loans above £200,000 and could help those wanting to buy in London. If nothing else, these products should please Tan.

Of course as a result of Lloyds Banking Group’s lending criteria, which limits its exposure with investors to no more than three mortgages across the entire group, any professional landlord looking to take advantage of these new rates may fall outside it.

The limit on the number of properties or total borrowing an investor can have either with a particular lender or across all lenders is commonplace and continues to frustrate landlords looking to increase their portfolios.

Many lenders restrict the number of properties to just three and in general, if an investor has more than 10 properties their options are restricted to the likes of The Mortgage Works and Aldermore Residential Mortgages.

In our recent Property Investor Survey we found that three in five investors plan to expand their portfolios over the next six months.

When you consider that 40% of respondents to the survey already own four or more properties and 25% own more than 10, exposure limits can be a problem.

Hopefully, if we keep banging on about this problem more lenders will listen and act. And you can rest assured that, like a dog with a bone, we will not let this one go easily.

Indeed, we have recently been talking to one lender that is planning a return to the vanilla buy-to-let market and stressed the importance of increasing property numbers and lending exposure amounts.

Let’s hope it takes this request on board as it would certainly help it to achieve its lending targets.

Recently we attended the first Landlord & Letting Show of the year, which was held at the Barbican in London. Attendance was good and the mood of investors generally positive.

We received many visits from landlords looking for funding to expand their portfolios.

In particular, we met several who are being asked to refinance elsewhere by their existing lenders, principally the Royal Bank of Scotland, Clydesdale Bank and the Irish banks, that continue their strategy of reducing exposure on existing property loan books.

In the main the borrowers have well-performing portfolios so finding new lenders willing to take them on, although limited, should not be difficult thanks to the likes of Aldermore, Shawbrook Bank, Kent Reliance and Paragon Mortgages.

But in a climate where banks are struggling to gain the respect of the man on the street, it seems odd that the lenders kicking out good investors are leaving themselves with non-performing loans.

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