Buy to Let Finance Update

Despite the COVID 19 pandemic and the subsequent lock downs and tier system introductions, the BTL Market has continued to thrive.  One could say that the part stamp duty relaxation, available until the end of March, has kept purchases buoyant, but we have also seen a high number of refinance deals completed as fixed rate deals have come to an end.

BTL lenders are still keen to do business and, as you may be aware, the 75% loan to value deals came back very quickly once physical valuations could be completed again.  As underwriting and support teams continue to work from home, the process is inevitably not quite as slick as pre COVID, but they have adapted well to the challenges faced.

In the current climate, underwriters are tasked with obtaining additional information from applicants, to assess the risk of a proposition.  One major item we are seeing is the request for a business plan to see how the landlord has been affected and is dealing with COVID 19 issues.  The plan should include a profile of tenants (student, professional, housing benefit claimants etc.), how voids and rent arrears are being managed and what cash resources are held to cover these.  We have put together a template from the best practices we have seen to assist our clients and are happy to share this. Please email us on property@sterlingcommercialfinance.co.uk to request a copy.

We are also seeing some delays once solicitors are appointed.  They also face the constraints of working from home and an increase in workload, as the residential housing market remains strong, due again to the stamp duty concessions.  The Chancellor faces a huge number of demands on the public purse strings and it remains to be seen whether the relaxations will be extended.  The lesson to be learned is to contact your legal representative early to see if they have the capacity to act for you and what the timescales will be so that all parties’ expectations can be managed. If it is a simple refinance exercise, many lenders have a panel of solicitors that can act for both you and the lender to reduce time and sometimes cost.