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FIRST TIME LANDLORDS NO LONGER SHUT OUT OF HMO FINANCE

By Helen McKinney, Head of Sales – South, Landbay.

Landbay has always strived to champion underserved niches in the BTL market and earlier this year we launched our first range of products aimed specifically at smaller landlords (those with three or fewer properties). The reaction was very positive.

We then decided to help smaller landlords take advantage of a different limited company structure, allowing investors to retain property within a trading limited company which has been active for 2 years, rather than having to set up a new subsidiary SPV. Plus we introduced new trading limited company products.

Now we’ve turned our attention to another underserved niche, first time landlords (FTLs). Breaking new ground has become a feature of the Landbay proposition and FTLs have, up to now, had more hoops to jump through than their more seasoned counterparts.

Houses of Multiple Occupation (HMOs) and Multi Unit Freehold Blocks (MUFBs) have been something of a closed shop for first time landlords, as many lenders believed that newcomers to the rental market needed to have built up a measure of experience first. However we believe that this new class of landlord, having seen what has happened to the sector over the past few years, with the loss of reliefs and tightened affordability criteria, are now already sufficiently sophisticated to have evaluated the responsibilities that come with managing an HMO or MUFB.

Having done their homework, they want the freedom to take advantage of yields which can be much higher than single flats or houses and provide greater financial rewards.

There is also more demand for living in HMOs, particularly from young professionals who want or need to share a house. Some renters simply can’t afford to rent their own place and many actually prefer communal living. Landlords who invest in bringing their HMO accommodation to a higher specification, can ask for and receive higher rental prices.

Currently, we are offering a two year fixed product at 3.39% and a five year fixed product at 3.69% with maximum LTVs of 70% and a 1.5% fee.

New first time landlords are the future of the sector and we are proud to be able to give our introducers the tools to support them.