Self-employed landlords struggling to get mortgage approval
By |Published On: 7th February 2017|

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Self-employed landlords struggling to get mortgage approval

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.

There have been calls for the mortgage industry to catch up with the 21st century and end the assumption that a landlord with a PAYE income is more secure than a sole trader or contractor.

Latest figures from the Office of National Statistics show that the level of self-employment in the UK increased from 3.8m in 2008 to 4.6m in 2015. What’s more, the age of both full and part-time self-employed has also increased.

For finance and business services, there has been a considerable increase in the South East and London. In all, the number of self-employed workers is catching up with the public sector-amounting for 16% of the UK’s workforce.


New research from The Tenancy Deposit Scheme shows that nearly 20% of landlords have got their own business-with almost a third of these salaried.

However, The Mortgage Broker Ltd states despite the fact that self-employment is growing and making waves in the UK economy, a lot of self-employed landlords are struggling to get a mortgage.

Darren Pescod, Managing Director of The Mortgage Broker Ltd, noted: ‘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.’[1]

‘Furthermore, the research reveals 12% of self-employed workers have been turned down for a first-time mortgage or remortgage, underling the problems of proving income and affordability for customers who are not full-time employees,’ he continued.[1]

Self-employed landlords struggling to get mortgage approval

Self-employed landlords struggling to get mortgage approval

Tighter Lending Criteria

Moving on, Mr Pescod said: ‘Ten years ago, sole traders had no problem securing a BTL 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.’[1]

‘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.’[1]

Concluding, Pescod said: ‘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.’[1]


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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