Landlords with buy to let mortgages are finding it hard to offer tenants long-term tenancies because many lenders refuse to support tenancies longer than one year.
CML Refutes Claims
The underlying problem is the Council of Mortgage Lenders and Insurers, which says tenancies lasting more than one year are not permissible. Their reasoning is that if a landlord defaults, the lender would not be able to sell the property to recover the debt with a tenant in situ.
However, the CML refuted such claims, saying that more than half of lenders did not place restrictions on the length of tenancies. It says a study carried out by Shelter found that half of all buy to let lenders were happy for landlords to offer longer tenancy agreements.
“As Shelter has said, any landlord wanting to offer a longer tenancy should be able to find a suitable lender. And anyone renting should be able to ask their landlord for a longer term, confident that lending conditions aren’t going to be a barrier.”
NLA Says Lenders Could Do More
Chris Norris from the National Landlords Association says lenders could still do more to help. He points out that many landlords are still on historic legacy mortgages, which do not have such flexible terms. A number of mortgage products are set to a maximum tenancy of two years, which may not suit tenants looking for a long-term tenancy.
Some landlords complain that restrictive lending conditions are a real barrier, so the advice here is shop around for a suitable product and always check the key facts before you sign.
