Landlords in the South of England are set to benefit from enhanced borrowing opportunities after Redwood Bank announced changes that significantly increase the loan-to-value (LTV) ratios available on a range of property types, including houses in multiple occupation (HMOs).
The bank has introduced adjustments to its affordability criteria in a bid to counter the impact of rising costs and tighter yields, which have been constraining borrowing potential for many investors. Brokers say the changes are already bringing previously unviable deals back into play.
Mark Dobson (pictured), head of business development for the South and London at Redwood Bank, said: “This is exactly the kind of market intervention that landlords need right now.
“My team in the South have already seen the benefits for our brokers and borrowers with notable increases in LTVs available.”
Among the examples cited by Redwood are cases where changes to cost deductions in affordability assessments could release an additional £40,000 – a 6% increase in LTV – when refinancing a buy-to-let property.
Another scenario sees a 15.5% uplift in LTV on a large HMO refinance by opting for a three-year fixed term with a 5% fee. Commercial borrowers could also see an extra 4.9% LTV to help secure new premises.
The bank says the maximum LTV enhancements now possible are up to 16% for buy-to-let, 18% for semi-commercial, 21% for HMO and 8% for commercial property.
The improvements follow two targeted changes: the removal of automatic cost deductions in affordability assessments and a reduction in the stress rate assessment for two- and three-year fixed term loans. Borrowers also now have the option to apply a higher 5% fee on these fixed terms, which can further boost affordability.
Dobson described the impact as a “game-changer for landlords wanting to progress deals and fund their next move”, adding that the changes were generating “strong broker interest”.
He said the enhancements had been a key talking point at the recent NACFB Expo, particularly among brokers active in the South East, where high property prices and tighter yields have often limited borrowing capacity.
Redwood Bank is already in discussions with brokers on cases that illustrate how the new approach is unlocking leverage for landlords seeking to refinance, release equity or fund acquisitions. The bank expects the policy shift to deliver wider benefits for landlords and small businesses facing constrained affordability in today’s market.
