Buy-to-let lending criteria

The maximum age at the end of the term is 85.

The minimum age is 21.

The maximum number of applicants is four. Only two will be used for affordability.

Consumer buy-to-let (CBTL) rules will apply to remortgage applicants who don't own any other let properties and either: 

• wish to let their current home while buying a new residential property (known as a let-to-buy).
• have themselves, or a close relative, previously lived in the property and now wish to let it.
• have inherited the property and wish to let it.

All advisers submitting a CBTL application must hold the relevant CBTL FCA permissions. They must also have their normal mortgage ones. They must be on an advised sale basis.

We’ll assess buy-to-let applications and the choice of products on offer in the same way for CBTL and investment property loan (IPL).

Applicants must not have unspent convictions or pending prosecutions for fraud or dishonesty.

Subject to passing credit score, we can consider the following:

• CCJs and Defaults less than £500 may be considered.
• CCJs and Defaults more than £500 can also be considered if they
• weren’t registered in the last three years.
• Missed payments - Status 1 and 2 are acceptable, provided the commitment is up to date.
• Bankrupts who’ve been discharged for at least three years.

A deposit or a gift from an immediate family member is acceptable for standard buy-to-let applications. The person making the gift must not occupy the property.

We can’t accept builder's incentives or personal loans as a source of deposit. Builder's incentives must be treated as a reduction in the purchase price.

We can offer further advances to customers with standard buy-to-let mortgages.

Currently, we cannot offer further advances on limited company buy-to-let mortgages.

There is no minimum income requirement.

Suppose your client is remortgaging their home onto a let-to-buy basis with us in a standard buy-to-let application. We need their new residential mortgage offer on the property they're buying. If the residential property is being bought with cash, we must see the memorandum of sale and full purchase details.

We accept buy-to-let mortgage applications from limited companies. Here’s our criteria. We may still be able to help you if your case doesn’t fit every requirement.

Key criteria

• A limited company must be a special purpose vehicle (SPV), hold and let residential investment property with one of these standard industrial classification (SIC) codes:
  
  • 68320: other letting and operating of own or leased real estate.
  • 68209: management of real estate on a fee or contract basis.
  • 68100: buying and selling of own real estate.
• Loan to value (LTV) up to 80%.

No other SIC codes can be accepted.

• The rental income must cover at least 125% of the monthly interest payment on an interest-only basis.
• Directors and company shareholders need be the same, up to a maximum of four directors.
• Partnerships or Limited liability partnerships (LLPs) cannot be considered.
• The SPV must be non-trading.
• The mortgage payment is calculated at:
  
  • Pay rate for five year fixed rates.
  • Pay rate for like-for-like remortgages.
  • Pay rate +2% for all other lending.

All directors of the limited company must personally guarantee the full loan amount. A floating charge won't be needed.

The assessment of the application will include reviewing all other properties owned by the limited company.

• The maximum loan is £750,000, inclusive of any capitalised fees.
• The maximum loan to value (LTV) for houses is 80%, inclusive of fees.
• The maximum LTV for flats is 80%, inclusive of fees.

The minimum loan is £30,000.

Unacceptable loan purposes include: 

• Sale and rent-back cases, distressed sales and remortgages where the original vendor still lives in the property.
• Regulated buy-to-let applications where the property is being let to a family member.
• Remortgage applications where the property has been owned for less than six months.
• Properties where the applicant is buying in their name from their limited company.
• Repayment of unsecured business loans.
• Injection of business capital.
• Speculative purposes.
• Making of gifts.

The applicant is a portfolio landlord if the application includes four or more properties. This includes limited company buy-to-lets and mortgaged properties.

Properties held in the names of any of the borrowers, whether solely or jointly, should be included in the portfolio. 

The buy-to-let portfolio must meet these criteria, including unencumbered and managed properties.

• The maximum LTV for the portfolio is 75%.
• The maximum buy-to-let portfolio size is 15 buy-to-let properties. At most, five properties can be mortgaged with us.

The rental income must show the whole portfolio is self-supporting. This includes unencumbered properties and the property to be mortgaged.

It must meet the following income coverage ratio calculation:

• Maximum interest coverage ratio of 145%.
• Assumed stressed interest rate of 5.70%.

It must be demonstrated that the landlord:

• has grown their portfolio gradually, and any properties bought in the last 12 months haven't been purchased quickly.
• has considered the portfolio's ongoing and future management, including professional and management fees.
• has at least two years of experience in managing investment properties.
• has no more than 25% of the overall portfolio as House in Multiple Occupation (HMO) properties.

Construction methods

Property must be constructed with the following methods:

• Brick or stone walls.
• Structurally Insulated Panel Systems (SIPS).
• Modern steel frame.
• Modern timber frame or oak frame.
• Wimpey ‘no fines’ and Easy Form can be considered subject to a satisfactory valuation.
• Insulated Concrete Formwork (ICF).

Cladding

Properties can be clad in: 

• Traditional bricks or stone.
• Brick slips.
• Metal (zinc, copper, aluminium or steel).
• Modern render system (cement, line, acrylic or silicone).
• Timber up to 25% of external wall surface area.

Roofing

Acceptable roofs include:

• Pitched slate or tile roof.
• Thatched.
• Flat roofs are acceptable subject to a minimum of a 25 year insurance backed guarantee.

Solar panels

Houses fitted with solar panels are acceptable, provided that:

• Buildings cover includes adequate insurance to cover any damage caused to the property by the solar panels.
• The lease agreement meets the Society’s minimum standards.

For remortgage applications on houses with solar panels fitted under a lease agreement, please note that our ‘free legal service’ is not available.

The property can’t be constructed with the following methods:

• Properties with timber cladding covering more than 25% of the surface wall area.
• Any construction covered by the housing defect laws, such as:  
  • unrepaired prefabricated reinforced concrete.
  • high alumina cement.
  • large panel systems.
• Straw bale, hempcrete and volumetric construction.
• Sedum (living green) roofs.

We can't accept applications for: 

• The applicant intending to let the property to the local authority to use for social housing.
• Properties being purchased from or connected to a property club.
• Property classified as a house of multiple occupation (HMO).
  • This includes properties subject to mandatory, selective or extra licencing requirements.
• Second homes or holiday homes for personal use.
• Properties not in a habitable condition.
• Freehold flats.

In a mostly HMO-licensed area, we recommend that applicants check with the local authority before applying. The property may need an HMO licence. 

The property must:

• Have an Energy Performance Certificate (EPC) rating of E or higher dated in the last ten years.
• Be subject to selective licencing but not a house in multiple occupations.
• Have a maximum of five bedrooms.
  
  • We'll ask for a copy of the Assured Shorthold Tenancy (AST) agreement and selective licence where applicable for properties with five bedrooms.
• Be located in England or Wales.
• Provide basic standards.

Flats

• Flats requiring an EWS1 form must provide a valid EWS1 form to support the property valuation.
• Where flats are in a block, flats above the fourth floor need lift access.
• Flats and studios need a minimum of 30 m2.
• Leasehold only (85-year lease minimum).
• £100,000 minimum property value.

The following types aren't acceptable: 

• Property with any commercial use, including flats in a mixed-use block.
• Flats converted from an office or industrial building.
• Ex-local authority flats, apartments or maisonettes.
• Flats with open deck or balcony access.

Houses

• Leasehold, subject to a minimum unexpired lease term of 85 years.
• £70,000 minimum property value.
• Maximum three floors.
• Freehold.

The rental income must cover at least 145% of the monthly interest part of your mortgage payment. The mortgage payment is currently calculated on an interest-only basis at:

• Pay rate for five year fixed rates.
• Pay rate for like-for-like remortgages.
• Pay rate +2% for all other lending.

The rental income is based on your estimate and is subject to confirmation from the valuer. The valuer will assess the rental income based on a family dwelling for an unfurnished property.

Your client can apply for a mortgage on a whole, wholly interest-only or part repayment/part interest-only basis.

We don’t need policies assigned to us for interest-only mortgages. But your client must have a lump sum at the end of the term to repay the capital they borrowed.

The main applicant (the main income earner) must be or have been, an owner-occupier of a property in the UK. The applicants must have lived in the UK for the last two years.

HM Armed Forces personnel abroad are considered residents of the UK during their deployment. In the case of foreign nationals, the applicants must have permanent rights to live in the UK and be able to evidence this. We can’t accept applicants on working visas.

For each application, we need: 

• A signed application declaration or application form.
• A completed assets and liabilities form.
• Identification (ID) for each applicant:
  • UK photocard driving licence (full or provisional).
  • UK paper driving licence (full only).
  • UK or EU passport.
  • Council tax bill.

It's assumed that an electoral roll search will verify proof of address. If verification doesn't happen, you'll be asked to provide one of the following documents:

• Bank statement (postal or printed and stamped in branch).
• UK photocard driving licence (full or provisional).
• UK paper driving licence (full only).
• Local authority tenancy agreement.
• Tax credit or pension credit letter.
• HMRC tax code notification.
• Credit card bill (postal only).
• Mortgage statement.
• State pension letter.
• State benefit letter.
• Recent utility bill.
• Council tax bill 

All submitted documents must be photocopies of the originals. We can't consider photographs or camera-scanned documents.

We must use a different document to check the applicant's ID and address.

If you cannot provide any of the above documents, please contact the intermediary enquiry line on 0344 481 2010. Press option 2 to discuss further options.

The property must be let on a single Assured Shorthold Tenancy (AST) agreement only.

• The AST must be renewable at least every 36 months, and no less than six months.
• Where the tenancy is longer than 12 months, it must be in the form of a DCLG model agreement.
• Maximum of four people on an AST.

We agree to you letting the property subject to your compliance with the following conditions:

(a) Any tenancy existing at the date of completion or created subsequently must be: 

• to a private individual or, if to more than one such individual, to all of them jointly.
• to an individual or individuals who don’t enjoy diplomatic immunity.
• an assured shorthold tenancy as defined in the Housing Acts.
• for a fixed period not exceeding 12 months.
• in respect of the whole of the property.
• for residential use only.
• in writing.

The maximum term is 35 years.

The minimum term is three years.