The Lloyds Banking Group, one of the UK’s biggest buy to let lenders, is introducing further restrictions for landlords. Landlords who approach the bank will only be offered loans for up to three properties, or up to a limit of £2 million.
Borrowers are currently able to take out up to nine mortgages with a total value of up to £3m across all of the group’s brands, a change that was only introduced last September. These new limits come into effect from Saturday but a spokeswoman for Lloyds said the vast majority of its customers would not be affected.
“Nine out of 10 of our buy to let borrowers have less than three properties with the group,” she told the Financial Times. “We’ve never been a provider for borrowers with massive portfolios.” But mortgage brokers said the move would restrict the options for buy to let investors looking for new mortgages. “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,” said David Hollingworth of London & Country, the mortgage broker.
Landlords that already have three or more properties will now have to look elsewhere for any new property acquisitions. Lloyds’ move will also hit those buy to let investors that are remortgaging their current properties. The buy to let mortgage market has been hit hard by the credit crunch. The number of lenders in the market as well as the choice of products has been significantly reduced.
The majority of buy to let business is now written by BM Solutions, Lloyds’ specialist buy to let brand, and The Mortgage Works, part of Nationwide Building Society.
“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,” said Aaron Strutt of Trinity Financial Group.
Lloyds has also reviewed its overall buy to let offering. From next Saturday, borrowers who apply for buy to let mortgages through brokers will only have access to products from BM Solutions.
Cheltenham & Gloucester (C&G) and Lloyds TSB Scotland will no longer offer the products. The group will continue to offer buy to let mortgages direct to borrowers through its Halifax and C&G branches.