Council licensing schemes threaten BTL market
Liverpool City Council is consulting on proposals to roll out additional licensing for all landlords under its jurisdiction. If the plans go ahead, it will be the second local authority to do so in a year.
But at least one lender – RBS and its subsidiary NatWest – has a longstanding policy not to lend where BTL property requires a special license.
Property consultant and landlord blogger David Lawrenson said landlords from Newham, the first English council to license all landlords, had contacted him to express their worries about meeting lenders’ criteria for remortgaging.
“I had a landlord contact me who had a mortgage with the RBS,” he said. “He had a loan-to-value ratio of about 40% and he was told he couldn’t continue with the loan on that property. If he was going to remortgage he had to go to somewhere else.”
An RBS spokesman said: “It is the longstanding policy of Royal Bank of Scotland Group not to lend where there is a requirement for a special licence for a buy-to-let property. No existing mortgages are withdrawn if a special licence is imposed.”
While licensing in Newham and Liverpool has been designed to cover all landlords, the past year saw 28 councils introduce licensing for landlords with three bedroom houses of multiple occupancy (HMOs) in addition to the mandatory licensing for larger, five bedroom HMOs. Fees range from £500 to over £800.
The Labour Party, which controls nearly half of all councils in England and Wales, has signalled its ambitions to move further in this area.
One Nation Localism, a report published this month, noted: “Labour councils are robustly using powers available to them to ensure a fair deal for tenants and deal with particular issues in their areas. Many are taking a proactive approach to tackling rogue landlords.”