First-Time Landlords After COVID-19

November 23, 2021

First-Time Landlords: COVID-19 changed the risks facing new landlords and their tenants. Income disruption increased the importance of rental affordability, financial reserves and early communication.

At the same time, Accord Mortgages changed its buy-to-let criteria in November 2021. The lender began considering certain first-time buyer landlords and removed its £25,000 minimum background income requirement.

The change created another possible route into buy-to-let. However, applicants still needed to satisfy the lender’s rental, affordability, property and credit requirements.

How COVID-19 affected landlords and tenants

The pandemic demonstrated that property ownership and rental income could not be considered separately.

Many tenants experienced changes to employment, income or working arrangements. Some landlords then faced delayed rent, arrears or requests for temporary payment plans.

Government measures also changed possession notice periods at various points in 2020 and 2021. These protections gave many tenants more time before a landlord could begin possession proceedings.

The measures did not remove a tenant’s responsibility to pay rent. However, they increased the time and financial reserves that a landlord might need to resolve arrears.

The official government guidance on longer notice periods explains the support in place during 2021.

For first-time landlords, the lesson was practical. A rental property could provide long-term income, but that income was never entirely detached from the tenant’s circumstances.

What changed for first-time landlords in November 2021?

Accord Mortgages announced that it would consider first-time buyers purchasing a property as landlords in certain circumstances.

The lender also removed its £25,000 minimum background income requirement for standard buy-to-let applications.

This did not mean that personal income had become irrelevant. Accord could still verify income where:

Top slicing formed part of the affordability assessment.
Income was needed to confirm an applicant’s tax position.
The application required further underwriting checks.
The applicant’s wider financial position affected the case.

Every application remained subject to the lender’s criteria and individual assessment.

Let’s hear from Accord Mortgages

Nicola Alvarez, senior manager for new propositions at Accord Mortgages, stated: “These recent criteria changes show our dedication to enhancing our buy-to-let proposition. This aims to simplify business for brokers and their landlord clients.

Moreover, by removing minimum income requirements, we are promoting accessibility. This change benefits first-time buyers aspiring to become landlords, demonstrating our sensible lending approach. Consequently, we can broaden our offering to brokers.

Ultimately, this support aims to help more people climb the property ladder. Additionally, these updates reflect our commitment to making property investment straightforward and accessible for everyone involved.”

Why was the criteria change important?

Many lenders had previously treated first-time landlords cautiously. These applicants had no record of managing tenants, maintaining rental property or dealing with periods without rent.

Removing an automatic income threshold allowed the lender to consider more of the complete case.

The assessment could therefore give greater weight to:

The expected monthly rent.
The mortgage payment and rental stress test.
The applicant’s deposit.
The property type and condition.
Credit history and existing commitments.
Financial reserves for repairs or missed rent.
The proposed ownership structure.

Our buy-to-let mortgage guide explains how deposits, rental calculations and property types may affect an application.

What did COVID-19 teach new landlords?

A property investment is supported by numbers, but sustained by preparation.

The pandemic highlighted several practical duties for first-time landlords:

Maintain funds for repairs, insurance and empty periods.
Assess whether the expected rent leaves a suitable margin.
Understand tenancy and possession procedures.
Keep accurate records of rent and tenant communication.
Consider how income disruption could affect both parties.
Review lender conditions before committing to a property.

New landlords also needed to distinguish between mortgage approval and investment suitability.

A lender might accept an application, but the landlord remained responsible for operating costs, taxation, safety obligations and tenant management.

How mortgage advisers could support these cases

The Accord update created an extra option, rather than a universal solution.

Advisers still needed to compare lender requirements and establish whether the proposed purchase made financial sense. This included checking rent, deposit, property type, applicant experience and contingency funds.

Connect network members can use our adviser services to access mortgage support, specialist lending knowledge and case placement assistance.

Consumers searching for suitable advice can use the first-time landlord adviser search. Connect Experts is the adviser directory for the Connect network and associated authorised firms. Mortgage advice is provided by the adviser or firm selected by the customer.

A measured route into buy-to-let

Accord’s November 2021 criteria update reflected a wider change in lender assessment. A fixed income threshold did not always show whether a rental property or applicant presented an acceptable lending risk.

However, broader access did not remove the need for care.

COVID-19 showed that rental income depends on real households, real employment and real financial pressures. Responsible buy-to-let lending therefore considers both the property calculation and the applicant’s ability to respond when circumstances change.

Mortgage advisers interested in specialist buy-to-let support can learn more about joining Connect Network.