Landlords facing higher costs and reduced margins are set to benefit from a series of changes aimed at unlocking additional funding in a high-cost market.
The update comes at a critical moment for property investors, particularly in the South of England, where higher expenses and reduced yields have restricted borrowing capacity. Brokers report that deals previously considered unattainable are once again viable, with Redwood Bank’s revised approach enabling larger loans.
“This is exactly the kind of market intervention that landlords need right now,” said Mark Dobson, head of business development (South and London). “My team in the South have already seen the benefits for our brokers and borrowers with notable increases in LTVs available.”
Redwood Bank is already reviewing cases with its brokers that illustrate the impact of the changes to affordability assessments. Examples include:
Changes to cost deductions releasing an additional £40,000, representing a 6% increase in LTV for refinancing a buy-to-let property.
The option of a 5% fee on a lower-rate three-year fixed term enables a client to refinance a large HMO with a 15.5% increase in LTV.
A commercial deal where an extra 4.9% LTV allowed the client to acquire new premises.
“It’s a game-changer for landlords wanting to progress deals and fund their next move,” commented Dobson.
Maximum LTV increases now possible, include:
Buy-to-let: up to 16% extra LTV
Semi-commercial: up to 18% extra LTV
HMO: up to 21% extra LTV
Commercial: up to 8% extra LTV
The adjustments are particularly impactful in the South, where low yields have frequently limited borrowing potential for landlords and SMEs.
The changes are the result of two targeted affordability updates and one new option:
Removal of automatic cost deductions in affordability calculations.
Reduction of stress rate assessment for 2- and 3-year fixed-term loans.
Option to apply a higher 5% fee for 2- and 3-year fixed terms.
According to Dobson, broker engagement has been high since the announcement. “There’s strong broker interest in these affordability improvements,” he noted. “I spoke to countless brokers at the recent NACFB Expo, about the ‘affordability boost’ and how it’s enabling better outcomes for their clients across the country, but especially the South East.”
