HSBC has today announced immediate changes to its domestic buy-to-let offering, increasing loan-to-values (LTVs) up to 80%. However, key restrictions apply:
- Maximum loan size: £400,000
- EPC requirement: Property must be rated A-C
- Let-to-Buy included in the offering
- Booking fees cannot be capitalised if it results in exceeding 80% LTV
Newspage asked brokers if more lenders are likely to follow suit and expand into the 80% LTV buy-to-let space, whether this reflects growing lender confidence in the UK property market and the support moves like this could provide to landlords facing financial pressures. Views below.
Aaron Strutt, Product and Communications Director at Trinity Financial said, “HSBC is clearly trying to boost the buy-to-let market and attract more landlords by reducing the deposit borrowers need to get an investment property. Quite a few lenders are offering 20% deposit buy-to-let rates at a time when many landlords are either exiting the market or switching to limited company buy-to-lets.
“The issue with these lower deposit rates is the rental stress tests: properties need to have really strong rental yields for the figures to stack up. If the rental income is not strong enough the requested mortgage loan size reduces and applicants will need to put down more of a deposit.
“Moneyfacts data recently showed there are currently a record number of buy-to-let rates being offered by banks and building societies. HSBC is offering some surprisingly cheap buy-to-let rates with two and five-year fixes at just over 4%. They do have larger arrangement fees but they also have some decent lower fee options.”
Sean Horton, Managing Director at Respect Mortgages said, “It’s good to see HSBC backing the buy-to-let sector with this 80% LTV offering. I think the £500,000 valuation limit is a mistake and too low. There are good quality properties above this cap and it won’t benefit many landlords investing in the London postcodes.
“The rental market is robust so this move should spark competition, with other major lenders likely to follow suit. Many landlords need some additional flexibility after years of tax and regulatory changes squeezing their margins.”
Riz Malik, Independent Financial Adviser at R3 Wealth said, “HSBC has helped landlords but limits linger. Their 80% loan-to-value move hints at growing market confidence but tight caps and EPC rules keep it selective. This will offer a lifeline to some landlords, but affordability remains a hurdle. Others may follow, but this isn’t a free-for-all—lenders are still playing it safe.”
Ben Perks, Managing Director at Orchard Financial Advisers added, “An 80% offering will free up some prospective buyers’ deposit money which may take the sting off the additional stamp duty they have to pay. This will be an attractive option for many as long as it’s priced reasonably. Buy-to-let lending has been hit hard recently and lenders need to innovate to compete, so it’s great to see HSBC taking a step forward.”
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