Lloyds Curbs Buy to Let Mortgages

by Mark Johnston

The Lloyds banking group, which is one of the largest buy to let providers in the UK is looking to implement further restrictions in order to protect themselves form adverse risk. The new rules will restrict investors from buying for than three properties or £2 million of lending which may prevent many property investors from continuing their business.Currently, the banking group allows borrowers to purchase up to nine properties with a total value of £9 million so the new changes will come as a blow to existing customers. A spokes person for Lloyds said: “Nine out of 10 of our buy-to-let borrowers have less than three properties with the group. We’ve never been a provider for borrowers with massive portfolios”.

Some industry insiders are concerned that the move by Lloyds will constrict an already troubled market. David Hollingworth of London & Country, the mortgage broker. “This clearly signals a change in Lloyds’ approach to portfolio lending which is significant, given BM Solutions’ position as a key player in the buy-to-let market,”

Exiting landlords who already have three properties and are looking to invest further will now need to look elswhere. Those hardest hit will be the landlords that already hold property outside of the rules and wish to re-mortgage as the new restrictions will also apply to them.

Since the start fo the financial crisis, the buy to let mortgage has been in decline. Many providers pulled out of the market or restricted it so much that investors have not been able to operate under their traditional business model. This steady decline has meant that there are very few providers now left in the market.

The buy to let arm of Lloyds is written by BM Solutions and The Mortgage Works which are both specialist buy to let mortgage providers. Both brands are owned by Lloyds and form part of the Nationwide Building Society.

Aaron Strutt of Trinity Financial Group commented by saying: “This policy change will mean that even more business will have to go to The Mortgage Works – the issue there is that they don’t want it all,”.

As part of this change, the Lloyds banking group has looked at its entire buy to let offering across all its core businesses. Starting from next Saturday, investors looking for a buy to let mortgage through a broker will only be offered products from BM Solutions. In the past Cheltenham and Gloucester (C&G) and Lloyds TSB have offered buy to let mortgages but going forwards this will be withdrawn from broker offerings. They will still continue to offer mortgages direct to customers via Halifax and Cheltenham and Gloucester branches.

This is the second time that Lloyds has limited its buy to let offerings. The group changed its policy back in September when it allowed borrowers to not only take up to nine mortgages out it also allowed nine additional mortgages from HBOS brands such as The Halifax.

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