Banks and Building Societies Should Lend to Self-Employed Landlords, Insists Broker
By |Published On: 7th February 2017|

Home » Finance News » Banks and Building Societies Should Lend to Self-Employed Landlords, Insists Broker

Banks and Building Societies Should Lend to Self-Employed Landlords, Insists Broker

By |Published On: 7th February 2017|

This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.

Banks and building societies should be lending to self-employed landlords, insists a leading national mortgage broker.

The Mortgage Broker Ltd is urging the mortgage industry to catch up with modern living and end the view that self-employed landlords are less secure than those with PAYE incomes.

Banks and Building Societies Should Lend to Self-Employed Landlords, Insists Broker

Banks and Building Societies Should Lend to Self-Employed Landlords, Insists Broker

According to the latest data from the Office for National Statistics (ONS), the level of self-employment in the UK rose from 3.8m in 2008 to 4.6m in 2015.

The age of both the part-time and full-time self-employed has also increased, and the percentage of self-employed individuals in finance and business services has risen considerably, concentrated in the South East and London. In fact, the total number of self-employed workers is fast catching up with the amount in the public sector, accounting for 16% of the workforce.

Research from the Tenancy Deposit Scheme (TDS) shows that almost 20% of landlords have their own business and nearly a third are salaried.

According to The Mortgage Broker Ltd, despite the fact that self-employment is growing and making a significant contribution to the UK economy, many self-employed landlords are struggling to get a mortgage.

The Managing Director of the broker, Darren Pescod, says: “Figures from Nottingham Building Society show that nearly one in eight self-employed people have been rejected for mortgages since working for themselves, despite often earning more than in their previous full-time employed job.

“Furthermore, the research reveals 12% of self-employed workers have been turned down for a first time mortgage or remortgage, underlying the problems of proving income and affordability for customers who are not full-time employees.”

He continues: “Ten years ago, sole traders had no problem securing a buy-to-let mortgage, but, thanks to tightened lending criteria, many banks and building societies are turning down self-employed investors. The reality is that a borrower with appropriate mortgage protection in place is low risk, regardless of whether they have their tax paid for them or if they do it themselves.

“Historically, the self-employed landlords have been a fairly marginal group, and many lenders could safely ignore them. However, the rise of the gig economy – people having temporary jobs or doing separate pieces of work, each paid separately, rather than working for employers – is growing fast and will lead to changes in mortgage lending and the economy overall.”

Pescod concludes: “Thankfully, we now have access to mortgage lenders that are looking at the self-employed a bit more leniently, with some lenders considering criteria of only needing one year’s accounts, where previously three years’ accounts was the minimum required.”

Have any self-employed landlords had difficulty in obtaining mortgage finance?

About the Author: Em Morley (she/they)

Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources. When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.

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