Post-Lockdown Buy to Let Market – Ltd co. and Personal

With the lockdown caused by Covid-19, we saw the UK property market effectively shut down for a period of two months, with only essential moves taking place. Lenders responded by cutting LTVs, reducing product ranges, or closing the door for new applications altogether. For those in the property market, it was an event reminiscent of 2008 and created significant uncertainty for the future.

Thankfully, it appears the country is now through the worse of the virus and lockdown, and we are all starting to see some normality slowly return to our daily lives.

With property transactions now able to take place again, where it is safe to do so, lenders have been quick to respond by issuing new product ranges and allowing new applications.

So, with two months of pent-up activity now hitting the market, we thought it would be beneficial to give an overview of the Buy-To-Let lending landscape in our post-lockdown world.

Firstly, an overview of Personal Name Buy-to-Let products:

– The majority of lenders have capped new loans at a maximum Loan-To-Value (LTV) of 75%. Some lenders will allow up to 80% LTV but do expect a slight premium on the rate.

– Most security types considered to, include single lets, House of Multiple Occupation and Multi-Unit Block of flats.

– As with pre-lockdown, loan facilities are still available on an Interest Only basis.

– Rates have generally reduced across the board due to the reduction in the Bank of England Base Rate; with 2 Year Fixed Rates now as low as 1.19%

For Limited Company BTL Mortgage products:

– Loan to Values have been capped at 75%.

– Most security types considered to include single lets, House of Multiple Occupation and Multi-Unit Block of flats.

– As with pre-lockdown, loan facilities are still available on an Interest Only basis.

– As of yet, we have not seen any significant reduction limited company mortgage rates. Rates are in the most part in line with pre-lockdown levels; with 2 Year Fixed Rates starting at 2.49%

Looking to the future:

No one likes uncertainty in the economy, but banks are particularly sensitive to it. Whilst we have seen some of this uncertainty removed, it is unlikely that we will see higher LTVs or further significant rate reductions, until we see a greater sense of normality fully return (i.e. no restrictions on movement or activities, removal of the furlough and self-employed income support schemes, etc.).

An overall trend we have seen pre and post lockdown is the slow gradual alignment of BTL rates for individuals & companies. With an ever-greater number of landlords purchasing via a Company or incorporating their existing properties, I would suggest this trend will continue. Whilst we are not quite fully aligned yet, the gap between rates is ever decreasing.

In summary, we have seen many positive moves for the property market during the past couple of weeks, from re-energised lenders to pro-active government advice, enabling the market to become active . We would expect this to continue at a good pace in the coming weeks & months, so there is much to be optimistic about again.

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