Here is the latest update from the Saffron Building Society. For details see their latest product information here. Lending criteria details are available here. Remember, you can access these products through our direct to lender mortgage club to get the benefits of payment on completion as well as out specialist mortgage support.
Saffron Announcement
Maximising New BTL Opportunities in These Turbulent Times
The Buy to Let (BTL) market has experienced a vast transformation over the past couple of years – not only have landlords had to adapt to a far higher interest rate environment, but also the gradual withdrawal of mortgage interest tax relief, stamp duty land tax reform, cuts to the tax free allowance on capital gains and stricter mortgage underwriting rules. In response, we are seeing fewer landlords entering the market, with the total value of new BTL lending only reaching £6.3bn in the fourth quarter of 2023, a fall of 55.4% on Q4 2022, according to UK Finance.
Despite all this, market reports indicate that, the BTL sector is still growing. With existing landlords now looking at different ways to grow their portfolios to navigate the challenging market conditions. In response, lenders are adapting to focus more on complex, higher value business. Particularly as inflation continues to fall, lenders are offering more attractive rates and criteria on BTL products tailored for limited companies. Changing to a limited company structure can also be considered for those landlords who are suffering from cuts to the tax free allowance on capital gains; by operating their BTL properties through a limited company, landlords can decrease their tax liability.
Alongside this, we may see growth in EPC rating-linked mortgage deals that favour those with more energy efficient properties of ratings A-C – a move which could allow landlords to increase the return on their investments.
Some landlords have also found that they are able to maximize their rental income by investing in Houses of Multiple Occupants (HMOs) and Multi Unit Blocks (MUBs), which are able to cater to a growing band of university students, young professionals, and even elderly individuals looking to downsize.
As the market diversifies and landlords look to pursue these new opportunities, a greater value is being placed on products with flexible criteria. Brokers should be well versed to guide their clients on those available, with Saffron offering a range of flexible BTL products that are well suited to a myriad of scenarios. We offer Limited Company BTL mortgages for different borrower types, including first time buyers, portfolio landlords, and new special purpose vehicles (SPVs). Saffron offers lower ICR’s of 125% of the product pay-rate used for all “pound for pound” re-mortgages, irrespective of an individual’s personal tax position. We also offer Expat BTL mortgages, and in March we launched a new product for expat landlords which has a fixed £2,500 arrangement fee.
Despite the pressures facing landlords, the BTL market is undergoing a shift in focus as landlords explore new opportunities. By adapting and evolving, lenders can support borrowers looking at these avenues and stimulate growth in this important part of the housing and mortgage markets.