A month is a long time in the buy-to-let mortgage market, which has always been a dynamic sector that continually changes in line with social, political and economic factors. The big news for landlords in July was the announcement of the stamp duty cut in England for properties valued up to £500,000.

This measure introduced by the government to help stimulate the housing market was also extended to buy-to-let properties, which could really encourage landlords to start actively seeking to expand their portfolios again. Although the 3 per cent surcharge for second homes is still applicable, buy-to-let investors would previously have paid 5 per cent stamp duty for properties up to £500,000, so there are big savings to be made while this incentive is in place.

As the government seeks ways to kick-start the housing market, it is also providing Green Home Grants to homeowners to help them make their homes more energy efficient. Once the scheme is launched in September, vouchers of up to £5000 can be applied for to help cover the cost of insulation and double glazing.

While businesses around the UK start to open up again, lenders are also returning to a more ‘business as usual’ approach to buy-to-let finance. There has been a flurry of activity over the last month, with lenders re-evaluating their lending policies and re-pricing their product ranges as competition increases in the marketplace. This is creating a downward pressure on mortgage rates, resulting in better deals for landlord clients.

Lenders are returning to more specialist areas of lending such as for HMOs and limited company applications with a wider range of products now available. Lenders such as Leeds and Hampshire Trust Bank are also offering products for holidays lets again, which presumably follows on from the opening up of these businesses around the UK. Some lenders may hold off returning to this niche sector while there is still the possibility of a Covid-19 second wave, but with the growing popularity of staycations in the UK, the market for holiday lets looks promising.

In support of landlords during the coronavirus pandemic, some lenders will take account of furloughed income when assessing the affordability of buy-to-let mortgage applicants. However, lenders may not take such a lenient view of applicants who have applied for abuy-to-let mortgage holiday during the crisis as this could be interpreted as demonstrating underlying cash flow issues with management of the property.

Overall, the buy-to-let mortgage sector is continuing to recover, so intermediaries can expect to experience an increase in enquiries from their landlord clients, particularly for purchases following the stamp duty cut. Although face-to-face meetings with clients may still be off the table, some brokers have used the coronavirus experience to transform their use of technology to do business. This may include holding client meetings via Zoom or improving their online presence.

With the buy-to-let mortgage market still in a state of flux it is important to stay on top of all the lender criteria and product changes to ensure that landlord clients are getting the most suitable products. TBMC aims to support brokers by providing our specialist expertise and up-to-date criteria knowledge to provide solutions to even the trickiest buy-to-let cases.

The UK housing market has opened up since the end of May, with visual inspections resuming albeit more quickly in England. This means that buy-to-let mortage lenders are also returning to a more normal approach to business. However, the recovery of the market will take time.

Positive improvements in the marketplace have seen many lenders launching new product ranges, offering higher loan-to-values (LTVs) particularly in the 75 per cent LTV bracket, providing more options for landlords. However, there is still a lack of competition in the 80 per cent LTV bracket which could create difficulties for landlords who are more highly leveraged when looking to remortgage.

Now that physical valuations can be carried out, some lenders have returned to more complex lending such as on HMOs, multi-unit blocks and limited company applications. Foundation Home Loans recently launched a selection of packager exclusives for standard and large HMOs which are available through selected partners including ourselves. However, it was disappointing to see Barclays withdraw from both multi-unit and limited company lending.

There are also competitively priced buy-to-let mortgages available for standard properties from high street lenders and some excellent product transfer rates for existing customers, including a 1 per cent 1-year fixed rate currently being offered by TMW.

It is likely that the marketplace will continue to develop in the coming weeks as more lenders respond to the new normal and we may see more options in niche areas of lending such as for holiday let properties.

There has been a fair amount of concern about the impact of coronavirus on the ability of tenants to pay rent during the crisis and the effect this could have on landlords. Given the government ban on starting the eviction process before the end of August, some pundits predicted that there could be a surge in eviction applications post-Covid-19. However, a poll commissioned by the RNLA questioned over 2000 tenants and 90 per cent had been paying their rent as usual, which suggests that a concern over a spike in evictions could be unfounded. 84 per cent had not needed any support from their landlord, and of those that did three quarters received a positive outcome.

Even though this report paints a good picture,there are some landlords having trouble collecting rent for their properties who have applied for a mortgage holiday with their buy-to-let lender. This may provide a short-term solution, but how will it affect a landlord’s ability to access finance post-coronavirus?

Although applying for a mortgage holiday will not affect a customer’s credit file, lenders may reasonably ask why it was needed.As they assess the risk of lending to an applicant, lenders will want reassurance that there aren’t any existing financial issues with the property, portfolio or business in question. This may make it more complicated for those who have taken a mortgage holiday when they seek further finance, but it remains to be seen how this will play out.

As the UK housing market gains momentum, landlords may be looking for their next opportunity to expand their portfolio and considering the most cost-effective way of doing this. There have been questions around whether landlords who run their property business via a limited company could use the government-backed Bounce Back Loan Scheme to fund further property purchases.

Small businesses can apply for up to £50,000 with no interest to pay for the first 12 months, after which the interest rate is 2.5 per cent. This could seem like a relatively cheap way to raise a deposit;however, lenders do not normally accept loans as a source of deposit and using the BBLS to profit from further property purchases is not the intention of the scheme.

Overall, the buy-to-let mortage market is making a steady recovery and this is likely to continue in the coming weeks and months, providing more options for landlord clients.