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Check your facts, CML: lending conditions do impede longer tenancies

The CML has refuted claims by MPs that lenders are a “stumbling block” to longer-term tenancies, but some remain unconvinced by the trade body’s argument…

I read with interest the story in Mortgage Strategy that quotes the following CML statement: “In a recent House of Commons debate, it was alleged that the CML was a ‘stumbling block’ to longer tenancies in the private rented sector, and that lenders won’t allow them. But both of these assertions are incorrect.”

However, the buy-to-let mortgage we took out in September 2016 states that we are limited to “an assured shorthold tenancy for a maximum term of one year”, so it is the CML’s assertion that is incorrect.

Furthermore, the CML’s statement continues: “As Shelter has said, any landlord wanting to offer a longer tenancy should be able to find a suitable lender. And anyone renting should be able to ask their landlord for a longer term, confident that lending conditions aren’t going to be a barrier.”

This comment is disingenuous, to say the least.

Lending conditions are a barrier, and maximum lengths of AST are never highlighted in the KFIs for mortgages.

Our tenants could ask for a longer term but I would have to decline their request or be in breach of our mortgage agreement.

Even if there are mortgages available that permit longer ASTs, most BTL landlords are tied in to mortgage contracts for a minimum of two years and possibly up to 10 years, so this is not something that could be quickly altered.

Finally, the CML adds that very few tenants ask for longer tenancies. We are new landlords and have already had to decline a request for a two-year tenancy.

I believe that a large proportion of tenants would like the reassurance of a longer tenancy; this is reiterated by many professional landlords and the media.

If the CML has any hard evidence that tenants don’t want tenancies of more than 12 months, we would appreciate it if this could be published.

Anonymous
Private landlord

Peter Williams deserves all our thanks as he plans departure from Imla

Responding to news that Imla’s executive chairman, Peter Williams, is to leave the organisation to join Vida Homeloans later in 2017 after more than a decade in the role…

What is Imla’s loss will be Vida’s gain.

Peter has put in some great service for the mortgage industry and we should thank him for that.

I wish Imla good luck in finding a suitable replacement.

David Copeland
LSL Property Services

BTL lenders can’t ignore rising swap rates forever – they will act this year

New data revealed that BTL lenders had not raised rates in line with recent swap rate rises…

With demand in the buy-to-let sector already under pressure from both fiscal and regulatory changes, it is good that lenders have not further burdened landlords by increasing interest rates. However, with rising swap rates this situation cannot continue forever.

We expect increases sometime in 2017 as lenders factor in the additional time spent on deeper background checks and affordability assessments, particularly for landlords borrowing as a limited company.

Whether increases happen before 1 October – when lenders will be obliged to be extra vigilant while assessing applications from portfolio landlords – remains to be seen, but we will be watching the market closely in this respect.

David Whittaker
Mortgages for Business

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