Foundation Home Loans has analysed its own lending book, comprised of 30,000 borrowers, and found that its buy-to-let borrowers were much less likely to have asked for, or taken, a Mortgage Payment Deferral (MPD) since the government’s first announcement regarding the availability of payment ‘holidays’ for borrowers back in March.
Foundation buy-to-let borrowers were around 25% less likely to require a mortgage payment deferral than residential borrowers.
Of those buy-to-let borrowers, a breakdown of the data shows that portfolio landlords are no more likely to have taken an MPD than their non-portfolio counterparts, while those who borrow through a limited company vehicle are also less likely to have taken an MPD than those borrowing as individuals.
Foundation says that landlord borrowers who were more likely to take an MPD included those with larger mortgages to service. The lender believes that landlord borrowers in these situations would be more impacted by tenants struggling to pay rent due to COVID-19 and thus the greater likelihood of an MPD being requested.
Foundation also said that HMO landlords were no more likely to have requested a deferral. Those landlords with properties reliant on short-term lets were unsurprisingly highly likely to need a deferral as their business model depended on people being able to move around the country. As the lockdown eases but the opportunities for travel abroad may remain limited, Foundation said short-term let landlords may well experience a resurgence in demand for their properties as Britons holiday in their own country.
The specialist lender has commended landlords for taking a ‘responsible’ and ‘pragmatic’ approach to dealing with potential Covid-19-related payment issues.
Hans Geberbauer, CEO at Foundation Home Loans, said: “When the initial government announcement was made about the availability of payment deferrals, there was considerable concern that landlords would request mortgage deferrals indiscriminately and potentially with a view to funding new investments, rather than using it to help tenants.
“While most lenders have experienced some egregious cases of misuse, our analysis shows that landlords should be widely commended for having taken both a considered and responsible approach to this issue over the past few months.
“We know that landlords have been helping tenants wherever possible, while using mortgage payment deferrals only where necessary. Guidance from mortgage advisers and industry bodies like the National Residential Landlords Association was instrumental in ensuring the overwhelmingly responsible use of mortgage payment deferrals by landlords.”