Accord Mortgages loosens income criteria for BTL borrowers

Accord Mortgages loosens income criteria for BTL borrowers

Accord Mortgages is the latest lender to ease the barriers to entry for buy-to-let borrowers, by removing its minimum income requirements for landlords.

This means from today (November 24), the lender will no longer ask BTL investors for a minimum income of £25,000, which had previously excluded any rental income.

Brokers who use Accord have also been told if they have a landlord client who’s also a first-time buyer, they should contact their business development manager at the lender directly for case-by-case treatment.

“Rather than just ‘computer says no’ our underwriters will have the flexibility to review each case on its merits and give you a lending decision based on good old common sense,” Accord said in an email to its advisers.

Chris Sykes, associate director at broker firm Private Finance called the loosening of criteria a "welcome change for many".

He continued: "[The lender's] previous £25,000 income used to have to be outside of their rental income, so for those who treat buy-to-lets as their pension for example, they wouldn’t qualify for finance.

“This sensible and tailored approach to lending is always welcome and we hope to see other lenders join the no minimum income space for buy-to-lets.”

Accord joins NatWest, another mortgage provider to remove its minimum income requirements for landlords earlier this year.

Some lenders already don’t have minimum income requirements for BTL landlords, such as Bank of Ireland, BM Solutions, Coventry Building Society, and Foundation Home Loans.

Aaron Strutt, director at broker firm Trinity Financial, said the moves by Accord and NatWest were in part down to an effort to move in line with their competitors.

"And don't forget, these banks will still be doing their searches and checking prospective investors' credit scores," he added.

Growth in the BTL space has been slow for many brokers up and down the country over the last year.

Advisers have put this trend down to inflated house prices and unaffordable deposits, as well as increasing levels of taxation on landlords.

Luke Spellman, a Coventry-based broker, said: “I have personally found that BTL purchases have been relatively subdued over the last year in my area, as house prices have grown.

“I have also noted that more of my customers are looking at properties further afield. In particular, in the north of England where property prices are lower.”

But even further north, some areas are seeing more BTL investors cash out than cash in. Angela McGhee, director of Newcastle upon Tyne-based broker Penda Financial, has found more investors are selling stock with a view to buy low again.

“There isn’t an increase in investors buying, but there is an increase in investors selling,” she said.

But it seems lenders are keen to buck this trend. By withdrawing their income requirements, lenders will be able to draw more BTL investors to the fore and onto their balance sheets, hence removing a barrier to entry which has contributed to a stalling market.