Buy to let definitions
We do not lend on MCOB regulated buy to lets i.e. Where the property is being let to a family member. Consumer buy to let (CBTL) rules will apply to remortgage applicants who don’t own any other let properties and either:
Investment Property Loans (IPL) will apply to anyone either:
- Wish to let their current residence whilst purchasing a new residential property (known as a let to buy)
- Have inherited the property and wish to let it
- Have themselves or a close relative, previously resided in the property, and now wish to let it.
All advisers submitting a CBTL application will need to hold the relevant CBTL FCA permissions in addition to their normal mortgage permissions.
- Purchasing a property specifically to let
- Remortgaging an existing rental property
The way we assess Buy to Let applications and the choice of products on offer will be the same for both CBTL and IPL.
The rental income must cover at least 160% of the monthly interest part of your mortgage payment, which is currently calculated at 4.25% on an interest only basis.
Buy to let products
- The rental income is based on your estimate, subject to confirmation from the valuer. The valuer will assess the rental income based on a family dwelling for an unfurnished property.
- Two year buy to let products are available for straight like for like remortgages
- Five year buy to let products are available for purchases and other remortgage applications
The maximum loan is £500,000 per property
The maximum LTV is 75% for houses, inclusive of fees or 65% for flats, inclusive of fees
The maximum term is 35 years
Number of properties
Your client can have up to 10 buy to let properties within their portfolio. We will look for the property portfolio to be built up over time, where a track record of account performance can be evidenced as the portfolio size increases.
Total lending with The Nottingham for Intermediaries, including residential mortgages, cannot exceed £1,500,000 (maximum £500,000 per property).
Please speak with your BDM to discuss multiple Buy to Let scenarios before submitting applications.
Portfolio landlord applications
Where the total number of properties (excluding limited company buy to lets) at the application level, including the property to be mortgaged is four or more, the applicant is considered to be a portfolio landlord.
A fully completed assets and liabilities form must be provided, which includes details of their background portfolio and business plan. The business plan must show that the landlord:
Portfolio landlord applications must meet the following additional criteria:
- Has at least 3 year experience in managing investment properties
- No more than 25% of the overall portfolio are HMO properties
- Has considered the ongoing and future management of the portfolio including professional and management fees
| Maximum LTV for the portfolio
|| 75% LTV
| Maximum buy to let portfolio size
|| 10 buy to let properties
- The overall portfolio must be evidenced as self-supporting by applying an ICR calculation to the aggregate (including unencumbered properties and the property to be mortgages) portfolio totals. The total rental income derived from the portfolio must cover the total portfolio mortgage commitment based on the following assumptions:
|Maximum interest coverage ratio
|Assumed stressed interest rate
The applicant/s own deposit or gift from an immediate family member is acceptable (providing the person making the gift is not occupying the property).
We do not accept builders deposits, or personal loans to support the clients application.
The minimum age is 25
The maximum age is 75 (at end of the mortgage term)
Number of applicants
The maximum number of applicants is 4 (only 2 for affordability)
Residency and property ownership
The applicant/s must currently own their own and occupy their own residential property in the United Kingdom. The applicant/s must have resided in the UK for the last 2 years. HM Armed Forces personnel who have been temporarily stationed abroad are deemed to have been resident in the UK during their period of overseas deployment. In the case of Foreign Nationals, the applicants/s must have permanent rights to reside in the UK and be able to evidence this. We do not accept applicant/s on working Visas.
Applicants who own multiple BTL properties will be required to complete an assets and liabilities form.
Useful sources of information for BTL applicants
The National Landlords Association (NLA)
The Residential Landlords Association (RLA)
The Association of Residential Lettings Agents (ARLA)
- The annual income for the main earner must be at least £25,000, or if below this figure, we will accept a combined income for joint applicants of £40,000
- A maximum of two borrowers’ incomes can be assessed; however we can accept four applicants on the application in total
- We will assess basic pensionable salary plus 50% of any overtime/bonus/commission. These must be paid monthly/quarterly and evidenced on the pay slips
- Pension Income is acceptable as part of the £25,000 income requirement
- We will not assess other unearned or foreign sources of income
At the time of the application, the minimum length of time in the current job is six months, as at the date of application. We may consider 3 months in the current job, providing same occupation, no employment gaps and no probationary period.
Probationary periods are accepted for professional applicants provided they have completed a minimum of three months in their new employment at the date of application and had at least 6 months continuous employment in the same occupation immediately prior.
Employees on a fixed-term contract with a minimum of 6 months until expiry are acceptable, provided they are professionals and have worked in the same profession for a minimum of 24 months. (i.e. acceptable industries in this category include the NHS, IT and professional sports people, while unacceptable includes unskilled, manual or clerical workers).
Temporary/agency/zero hour contract workers are not acceptable.
We will consider applicants on maternity leave and will assess the return to work salary. The applicant will need to provide their last payslip prior to maternity leave starting, showing the full time salary, along with confirming the following in writing:
- Whether they will be returning to work full or part time and the pro rata salary as applicable
- Full details of maternity leave pay i.e.: how many weeks left at full pay, half pay and SMP
- What savings provisions they have in place to support the mortgage whilst on reduced pay
- What childcare costs (if any) will be payable when they return to work
- The intended return to work date
Applicants are treated as self-employed where they are a sole trader, are in a business partnership or where they own 25% or more shares in a limited company. The applicant’s latest year’s share in profits will be assessed, or salary and dividends for limited company directors. The latest year’s accounts must not be more than 12 months old, subject to income fluctuating by no more that 20% year on year.
We would normally like the applicant to have 3 years’ trading figures, although our minimum requirement is 2 full years’, trading figures plus a projection based on at least 6 months trading for the third year. Their accountant will need to provide a satisfactory reference/explanation and a 6 month projection.
We don’t normally require sight of accounts, unless specifically requested by an underwriter. We prefer to send a reference to the applicant’s suitably qualified accountant.
Acceptable qualifications are; AAPA, FAPA, ACMA, FCMA, ACA, FCA, ACCA, CA, CPFA and FCCA. Where no suitably qualified accountant is available, we will use a minimum of 3 years of SA302s, when provided together with the corresponding HMRC Tax Overview to show that the tax due has been paid in full. Each SA302 and Tax Year overview must relate to a full 12-month trading period.
The buy to let property
- 35 years maximum term
- £100,000 minimum property value
- Up to 65% loan to value
- £500,000 maximum loan amount
- Maximum of 10 stories in a block
- Flats above the 4th floor need lift access
- Flats and studios need a minimum of 35sq meters
- Leasehold only (85 year lease minimum)
- Flats must have been occupied previously
- Flats need to be a minimum of 2 years old
- No flats above commercial premises of any kind
- No flats converted from an office or industrial building
- No Ex Local Authority flats, apartments or maisonettes
- No balcony access
- 35 years maximum term
- £70,000 minimum property value
- Up to 75% loan to value
- £500,000 maximum loan amount
Acceptable construction types
- The property must be in England or Wales
- A maximum of 4 bedrooms with a maximum of 4 tenants
- The property must be let on an Assured Shorthold Tenancy (AST) renewable at no more than 12 monthly intervals and no less than 6 monthly intervals
- All tenants must be named on one AST as the property will be valued as a single family dwelling for rental purposes
- The buy to let property to be mortgaged must have an EPC rating of E or higher dated in the last 10 years
- Property must be of traditional construction with brick or stone walls with pitched slate or tile roof
- Properties can be clad in; traditional bricks or stone, brick slips, metal (zinc, copper, aluminum or steel), modern render system (cement, line, acrylic or silicone)
- Modern timber frame or oak frame
- Modern steel frame
- Structurally Insulated Panel Systems (SIPS)
- Insulated Concrete Formwork (ICF)
- Wimpey ‘no fines’ and Easy Form can be considered subject to a satisfactory valuation
- 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 adequate insurance is in place to cover any damage caused to the property by the solar panels
- For remortgage applications on houses with solar panels fitted under a lease agreement, please note that our ‘free legal service’ is not available
- Property intended for occupancy by a person/s related to the applicant
- Properties converted into bedsits with shared kitchen and bathroom facilities
- Properties that require a mandatory houses in multiple occupancy (HMO) license, or that are in a neighborhood that is predominantly HMO licensed properties (we advise applicants/advisers to check with the relevant local authority whether the property is likely to require an HMO license prior to submitting an application)
- Property let to students or persons with diplomatic immunity
- Property intended for sub-letting (the applicant lets the property to the local authority who in turn offers the property for social housing)
- Properties that are not in a lettable/ habitable condition
- Remortgaged properties that have been owned for less than six months (sales and back to back transactions)
- Properties where the applicant is buying in their personal name from their own Limited Company
- Sale and rent back scenarios and distressed sales, including remortgages where the original vendor is currently residing in the property
- Properties being purchased from or connected to a Property Club
- Pre-fabricated properties
- Timber framed properties with timber cladding
- Straw bale, Hempcrete and Volumetric construction
- Mobile homes and houseboats
- Sedum (living green) roofs
- Any construction covered by the Housing Defect Legislation, such as high alumina cement; unrepaired prefabricated reinforced concrete, large panel systems
- Second homes and holiday homes
The let to buy property
If your client is remortgaging their current residential home onto a LTB basis with us, we will need to see a copy of their new residential mortgage offer on the property they are buying, if the residential property is being purchased with cash we will require to see the memorandum of sale and will require full details of the purchase.
The tenancy agreement must be:
- A single tenancy agreement only
- Assured Shorthold Tenancy (AST)
- AST must be renewable at no more than 36 monthly intervals, and no less than 6 monthly intervals
- Tenancies longer than 12 months must be in the form of a Department for Communities and Local Government (DCLG) model agreement of September 2014 (or as since amended)
- The maximum number of people on one AST is four.
Your client can apply for a mortgage on a wholly repayment, wholly interest-only or part repayment/part interest-only basis.
We do not need policies to be assigned to us for interest-only mortgages, but it is your client's responsibility to ensure they have a lump sum large enough at the end of the term to repay the capital they have borrowed.
Higher lending charge
There is no higher lending charge on any buy to let products.
Currently no further advances are available for buy to let mortgages.
For each application we require:
- A completed assets and liabilities form
- Latest three months' bank statements showing all transactions
- Latest three months' pay slips (if employed)
- Three years accounts or SA302s and Tax Year Overviews (if self employed), we may need to write to the applicants accountant (subject to acceptable qualifications) for a reference.
- ID for each applicant:
- UK or EU passport
- UK photocard driving licence (full or provisional)
- UK paper driving licence (full only)
- Council tax bill
- EU member state ID card
- Non-EU passport
- Non-EU ID card
- UK Residence permit
- Proof of address – it is assumed that proof of address will be verified by the electoral roll search we undertake. If verification does not occur, you will be asked to submit one of the following documents:
- UK Photocard driving licence (full or provisional)
- UK Paper driving licence (full only)
- HMRC tax code notification
- Recent utility bill
- Council tax bill
- Tax credit or pension credit letter
- Local authority tenancy agreement
- State pension letter
- State benefit letter
- Bank statement (postal or printed and stamped in branch)
- Credit card bill (postal only)
- Mortgage statement
We cannot use the same document to check the applicants ID and their address. (If you cannot provide any of the above documents, please contact the intermediary support team on 0344 481 2010 and press option 2 to discuss further options)