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FOR INTERMEDIARY AND PROFESSIONAL ADVISORS ONLY. NOT FOR CONSUMER USE.

Coventry intermediaries logo0800 121 7788 Monday to Friday 9am - 6pm

Buy to Let lending policy

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Applicants

Age

All applicants must be aged 18 or over, and they must be no more than 85 years old at the end of the mortgage term. Applicants must be no more than 75 years old at the date of application for purchases and remortgages. There is no maximum age at application for further advances, porting or transfer of equity cases.

First time buyers

Buy to Let loans are not available to first time buyers. A first time buyer is defined as an applicant that has never owned a property.

Address history

We require three years' UK address history for all applicants. Where an applicant is not able to provide three years’ UK address history, non-UK addresses should be recorded and the case reviewed on its own merits.

Number of applicants

We allow up to four applicants on a mortgage application.

Residency status

Applicants must currently be resident in the UK and have permanent leave to remain.

For non-UK nationals (i.e. EEA and Swiss Nationals), we will require evidence of two years' UK residency history. For non-EEA nationals each applicant must have been granted indefinite leave to remain or a right of abode to live and work in the UK.

Applicants must not hold any level of diplomatic immunity.

Credit check

We will carry out a credit check on all mortgage applicants as well as additional checks to verify the identity of the applicants. Please refer to our privacy policy for further details.

Acceptable credit history

We will consider applications from applicants with previous CCJs, defaults or arrears, provided they do not exceed the limits in the Credit history matrix.

Credit history matrix

Standard acceptable limits
Repossessions Not acceptable
Bankruptcy Acceptable if discharged for at least 6 years
IVA Acceptable if completed for at least 6 years
CCJs in last 6 months None allowed
CCJs over 6 months up to 3 years Less than £250 satisfied or not
CCJs over 3 years old Considered on an individual basis
Defaults in last 3 years
  • Mortgages
  • Secured loans
  • Unsecured loans
Less than £250 satisfied or not
Defaults over 3 years
  • Mortgages
  • Secured loans
  • Unsecured loans
Less than £1,500 satisfied or not, may be considered on an individual basis
Defaults in last 3 years
  • Communications
  • Mail order supplier
  • Credit cards or store cards
Less than £250 satisfied or not
Defaults over 3 years old
  • Communications
  • Mail order supplier
  • Credit cards or store cards
Less than £1,500 satisfied or not, may be considered on an individual basis
Arrears in last year on unsecured debt 1 month's arrears are allowed
Arrears in last 3 year on secured debt 1 month's arrears are allowed

Identification and verification

Two forms of identification are required for each applicant - please see Identification and verification - acceptable documents

All documents used for verification must be originals or certified copies of documents that were originally printed at source and posted to the address of the applicant(s). Copies printed from the internet are not acceptable.

If you have examined the original document, you may certify the copy.

If you have not examined the original document, copies of original documents can only be certified by one of the following:

  • Legal professional (solicitor registered in England and Wales, Northern Ireland or Scotland, barrister registered in England and Wales, Northern Ireland or Scotland or notary public registered in any country)
  • Qualified accountant (registered with ICAEW, ICAS, CAI, ACCA, CIPFA or CIMA)
  • Public sector official (serving officer of the Armed Services, serving police officer, teacher in current employment)
  • Medical professional (doctor registered with the General Medical Council, dentist registered with the relevant national professional body)
  • Post Office official (person authorised under the Post Office Document Certification Service)
  • Embassy official (an embassy, consulate or high commission officer in the country of issue of the relevant document)
  • Other (local government councillor, Member of Parliament, bank manager, building society manager or minister of religion).

Copies of original documents should have been certified within the last 12 months using the following words: ‘I confirm that I have seen the original document’.

The person certifying should be in current employment, but we will also accept certification from a person who has retired (unless the list above specifically indicates that the person should still be serving), provided they still hold the qualification (and are a member of the relevant institute).

The person certifying must not be related to you in any way e.g. spouse, partner, sibling, parent, child or in-law, and they must not be named as a joint account holder/borrower on your mortgage. You cannot certify your own identification.

Identification and verification - acceptable documents

List A - Confirmation of identity (must show name and signature)

  • Full passport (must be current and valid)
  • Full or provisional UK photocard or paper driving license (must be current and valid)
  • EEA photocard driving licence (must be current and valid)
  • Northern Ireland electoral identity card
  • Shotgun or Firearms certificate
  • EEA member state identity card

List B - Confirmation of address (must show name and address)

  • Full or provisional UK photocard or paper driving license (must be current and valid)
  • House insurance certificate
  • Bank/building society investment related statement less than three months old (not issued by the Coventry Building Society)
  • Bank/building society mortgage statement less than three months old (not issued by the Coventry Building Society)
  • Council/local authority tax bill - less than 12 months old and valid for the current year
  • Utility bills (excluding mobile phone) less than three months old
  • Northern Ireland electoral identity card

Please note, these lists are not exhaustive. Please contact the Intermediary Development Team on 0800 121 7788 (selecting option 2) for further clarification.

Employment and income

Minimum income

No minimum income is required.

Proof of income

Type of employment Proof of income
Employed
(including Limited Liability Partnerships paid via PAYE, Zero Hour Contracts)
  • Latest P60 and last month's payslip.
  • If the applicant is employed by a family business or a family member we will require two months' bank statements. We may ask for further information as well.
Contracted Personnel
(including zero hour contracts)
  • Latest contract.
Self Employed - Sole Trader, Partnerships (including Limited Liability Partnerships) and Sub-contractors
  • The latest year's HMRC Tax Year Calculation plus the Tax Overview documentation.

Latest financial year should be no older than 12 months at the date of application.

The documentation may show the latest financial year up to 18 months old at the date of application when supported with the latest six months' personal bank statements.

Directors with less than 20% share in the Company
  • Latest P60 and last month's payslip.
  • If the applicant is employed by a family business or a family member we will require two months' bank statements. We may ask for further information as well.
  • Where the applicant(s) has/have dividend income for the company they work for, we will request the latest year's HMRC Tax Calculation plus the Tax Year Overview documentation. The latest financial year should be no older than 12 months at the date of application. The documentation may show the latest financial year up to 18 months old at the date of application when supported with the latest six months' personal bank statements.

    Or

    A reference from the company accountant.

Directors with 20% or more share in the Company
  • Latest year's HMRC Tax Calculation plus the Tax Year Overview documentation. The latest financial year should be no older than 12 months at the date of application. The documentation may show the latest financial year up to 18 months old at the date of application when supported with the latest six months' personal bank statements.

    Or

  • Accountant's Certificate covering the most recent one year's accounting period.
    • Latest financial year should be no older than 12 months at the date of application.
    • The Accountant's Certificate may show the latest financial year up to 15 months old at the date of application when supported with six months' personal bank statements.
    • We will request the Certificate directly from the Accountant.
    • Full details of our Accountant's certificate are available here.
Pension Income
  • State Retirement Pension (SRP)
  • Private pension
  • Company/Occupational Pension
  • Drawdown on pension fund
  • Widow/Widowers' pension
  • At least one of the following are required where the applicant is already receiving the pension:
    • Latest two months' bank statements showing monthly pension payment
    • Latest annual statement from the provider (letter from the Department for Work and Pension for SRP)
    • Latest Pension slip

      Documents provided should be no more than 12 months old.

Rental income
  • BTL portfolio document, or
  • Latest year's HMRC Tax Calculation plus the Tax Year Overview documentation.
  • Latest financial year should be no older than 12 months at the date of application. The documentation may show the latest financial year up to 18 months old at the date of application when supported with the latest six months' personal bank statements.

Approved accountancy bodies

Accountant's certificates should be prepared by an Associate or Fellow of an approved accountancy body:

  • Institute of Chartered Accountants (ICA)
  • Association of Chartered Certified Accountants (ACCA)
  • Chartered Institute of Management Accountants (CIMA)
  • Institute of Financial Accountants (IFA)
  • Association of Authorised Public Accountants (APA)
  • Chartered Institute of Public Finance & Accountancy (CIPFA)
  • Chartered Institute of Taxation (CIOT)
  • Association of International Accountants (AIA)

Rental criteria

Rental income

The minimum rental income required from the property is established using the relevant Interest Coverage Ratio (ICR), based on the Society's applicable reference rate.

Rental income is assessed using the figure provided in the valuation report, based on the property being let on a single unfurnished AST agreement, to a sole occupant/single family or for up to four individuals on a single unfurnished AST agreement where the property is suitable for a single family unit occupancy.

Rental income (Interest Coverage Ratio (ICR) and Reference Rates)

Reference rate Customer Type
New
(inc. additional borrowing)
Porting/TOE
(change)^
Porting/TOE
(no change)^^
Remortgage with no additional
borrowing
Product 2 Yr BBR Tracker 5.5% 5.0%
Flexx for Term
2 Yr Fixed
3 Yr Fixed
5+ Yr Fixed 5.0%*

If each applicant's individual income is less than £40,000 (including all gross income, total gross monthly rental income on this application and all other investments), and all applicants declare themselves to be a non-taxpayer or basic rate tax payer the minimum rental income required is 125% of your client's monthly mortgage interest payment on a reference rate of up to 5.5%*, based on the chosen product.

If any individual applicant's income is £40,000 or more (including all gross income, total gross monthly rental income on this application and all other investments), or if any applicant declares themselves to be a higher rate or additional rate tax payer, the minimum rental income required is 140% of your client's monthly mortgage interest payment on a reference rate of up to 5.5%*, based on the chosen product.

*Where the total loan has 5 years or more remaining on a Fixed rate product, or for remortgage applications with no additional borrowing, the reference rate is currently 5.0%.

Tenancy agreements and occupancy

The property must be let on a single assured shorthold tenancy agreement for a minimum term of 6 months and a maximum term of 36 months* to either a:

  • sole occupant
  • single family unit
  • maximum of four tenants
or
  • let to a Corporate Body

Tenants must not hold any level of diplomatic immunity.

Where the property is let to a Corporate Body (this includes educational establishments, housing associations or local authorities) the tenancy agreement between the Corporate Body and the occupier(s) is a minimum of 6 months and a maximum of 36 months* and must be let on a single assured shorthold tenancy agreement.

* where the tenancy agreement is over 12 months up to a maximum of 36 months* a DCLG tenancy agreement must be used.

Licenced HMO Properties

We only lend on licensed HMO properties in Scotland.

Any other HMO properties, whether they are subject to a mandatory license or not, are not permitted.

Portfolio landlord criteria

A portfolio landlord is/are clients with four or more Buy to Let mortgaged properties, either together or separately, in total.
Specific criteria includes:

  • We assess all the properties in the portfolio in all cases. This means that you must provide us with information that includes the value of each mortgage, monthly mortgage repayments, monthly rental amounts and estimated property values. You'll also need to give us full details of any unencumbered BTL properties.
  • There should be a maximum LTV of 65% across the whole portfolio. This calculation will include properties that are unencumbered and the property they're applying for.
  • The minimum ICR across the whole portfolio, including properties mortgaged with other lenders, should be 125% (based on a reference rate currently of 5.5%). This calculation includes properties that are unencumbered and the property they’re applying for.
  • No single property should be below an ICR of 100%.
  • Portfolio landlords must have acquired their first BTL property more than 24 months before the current application. No more than three properties (prior to the current application) should have been acquired within the last 12 months.
  • The dedicated BTL portfolio underwriting team will also review the portfolio to consider geographical exposure and property management risk. For example the number of properties in the same block of flats or street, and how the properties are managed.

Property

Maximum number of properties

Any totals or limits refer to the Coventry Building Society Group, not per company.

The maximum number of rental properties a household can have in mortgage with us is three in total.

The maximum number of rental properties a household can have in mortgage with all lenders is ten.

Multiple occupancy properties

Properties with more than one kitchen or designed or converted for multiple occupancy are not acceptable.

For more information see the HMO and Licenced HMO Properties section

Property location

Properties must be situated in England, Wales, mainland Scotland or the Isle of Skye.

Tenure

Freehold

Freehold (also known as Feuhold, heritable or absolute ownership) tenure is acceptable for houses, bungalows and cottages in England, Wales and Scotland.

Freehold (including the previous Feuhold and Heritable Security Tenures) is the only acceptable tenure for properties in Scotland.

Leasehold

Leasehold tenure is acceptable for houses, bungalows and cottages in England and Wales.

Leasehold is the only acceptable tenure for flats and maisonettes in England and Wales.

Leasehold tenure is acceptable provided:

  • No sub-leases have been created
  • All of the properties within the block have a leasehold title
  • The unexpired leasehold term must be at least 70 years at completion

Construction

Properties must be built of brick or stone with a tile or slate roof. For flats, we will also accept a flat mineral felt roof. The mortgage valuation will be used to confirm the suitability of the property.

Construction of brickwork

Single skin brickwork is only acceptable for garages and porches provided they are single storey, or a small proportion of the habitable area subject to valuer’s guidance.

Steel framed properties

We will consider steel framed properties provided that they were built on or after 1 January 1990. The cladding must be predominantly (67%) either brick or stone at all levels. Outer cladding specifically excluded includes large concrete panels, timber, plastic, metal sheeting, and tiles. However, areas of less than 33% of the total external wall area formed in these materials may be considered on their own merits provided that the remainder of the walls are constructed of an acceptable material.

Timber framed properties

Timber framed properties built after 1990 can have up to a maximum of four storeys considered.

  • Houses, Cottages and Bungalows

    Timber framed properties built after 1945. Cladding must be predominantly (67%) of either brick or stone at all levels. Outer cladding specifically excluded includes large concrete panels, timber, plastic, metal sheeting, and tiles. However areas of less than 33% of the total external wall area formed in these materials can be considered on their own merits if the remainder of the walls are constructed of an acceptable material.

  • Flats and Maisonettes

    Timber framed construction built pre 1995 up to two storeys maximum and post 1995 up to four storeys maximum. The outer skin must be predominantly (67%) either brick, concrete block or stone block at all levels.

Please note, the information above outlines our general construction criteria. If you have a specific query, please contact our Intermediary Development Team on 0800 121 7788 (selecting option 2).

Solar power panels

Applications where solar power panels are installed on the property being purchased, or remortgaged, are acceptable, subject to the valuer confirming the property is suitable security, and where the solar panels have a lease the acting conveyancer confirms that the lease is acceptable.

Flats

Flats above shops are restricted to a maximum LTV of 75% and dependent on the nature of the business, we may not be able to lend at all.

We will not consider a mortgage application for ex-local authority flats or ex-housing association flats:

  • Where there are more than five storeys.
  • Where the flats are accessed via an external deck or 'balcony access'.

The loan to value on ex-council or housing association flats or maisonettes is restricted to 70%.

We also will not consider the following:

  • Lending on freehold flats or maisonettes and studio flats/apartments
  • Flats in a block of more than ten storeys
  • Flats on the fifth storey or above in a block without lift access

Maximum LTV, criteria, and definition for new build flats, can be found within new build properties (less than or equal to three years old, or first occupation).

New build or converted properties (less than or equal to 3 years old, or first occupation)

Apartments, flats and coach houses

The maximum loan to value for a new build or converted apartment, flat or coach house is 50% LTV.

We define new build as properties that have been built within three years of the mortgage application or are properties to be occupied for the first time. This includes flat conversions where the number of flats in the development exceeds ten.

Houses

The maximum loan to value for a new build house is 85%. Please refer to the specific mortgage product details for maximum Buy To Let LTV limits.

We define new build as properties that have been built within three years of the mortgage application or are properties to be occupied for the first time.

Any new build properties must hold either:

  • A Professional Consultant's Certificate (PCC) which is valid for the first six years, or
  • An acceptable builder's guarantee which is valid for the first ten years

Second hand properties under ten years old must have been built with the benefit of an acceptable builder's guarantee scheme subject to the following exception:

  • Where the property was built or converted within the past six years, we will accept the application if it was built with the benefit of a Professional Consultant's Certificate (PCC) where cover was valid for the first six years.

For both new and converted properties the legal representative must confirm:

  • Building regulations' approval has been obtained
  • Planning approval has been obtained and in the case of listed buildings, the relevant consents for changes to listed buildings have been obtained and that the works have been carried out in compliance with those consents

Builder's incentives

The vendor of any new property is required to disclose the full value of any incentive in connection with the purchase of the property.

Where we are notified of any incentives, the value of the incentives will be deducted from the purchase price to ascertain the net purchase price. The maximum loan and mortgage offer will be based on the net purchase price.

Purchase applications

For purchase applications, the vendor must have owned the property for a minimum of six months.

Properties close to commercial outlets

Our ability to lend may be restricted for properties that are in close proximity or influential distance of commercial outlets. We will take advice from our valuers when assessing the property to be mortgaged.

Self-builds and self-build conversions

Applications are not considered where the property offered for security is a self-build property or a self-build conversion, where the construction or conversion of the property is not fully completed at the time of application.

Property exposure limits

Applications where it is identified that the customer owns more than 10% of the development, in which the proposed property will be located, will not be accepted.

Where there are ten or less properties on the development or estate, if the applicant already owns one or more properties in the development or estate, we will not consider lending under these circumstances.

Japanese knotweed

Properties affected by Japanese knotweed, RICS categories 1 and 2, are acceptable subject to a satisfactory valuation report.

Category 1 – Japanese knotweed was not seen on the property, but it could be seen on a neighbouring property or land where it was more than seven metres away from the boundary.

Category 2 – Japanese knotweed was not seen on this property, but it was seen on a neighbouring property or land within seven metres of the boundary but more than seven metres away from habitable spaces, a conservatory and/or a garage.

Properties affected by Japanese knotweed that do not meet the above criteria are unacceptable.

Loan criteria

Minimum loan amount

The minimum advance is £25,001.

Maximum loan amount

LTV Maximum advance
Up to 50% £1,000,000
Over 50% - 75% £500,000

Acceptable loan purposes

We will consider applications for the following loan purposes providing the application meets all our lending criteria:

  • To purchase a property that is or will be let
  • To remortgage a property that is or will be let
  • To pay for improvements/repairs to the let property or any other property owned by the applicant (owner-occupied or let)
  • To raise capital to fund the purchase or provide the deposit for a new investment property or for a main residence
  • To purchase the freehold title of a leasehold property which is already in mortgage to us
  • To extend the lease of a property
  • To purchase the equity of another party to the mortgage
  • To purchase additional land

This list also applies to properties that are currently unencumbered.

Unacceptable loan purposes

We will not accept applications for the following:

  • Where the applicants intend to purchase properties in their own name from a company in which they have an interest
  • Remortgage of a property currently used as a main residence on to a Buy to Let basis
  • Where a property is being purchased with the intention of letting it to any previous owner(s), or close relativeMore infoToolTip on focus
  • Where it is identified that the DWP (Department for Work and Pensions) or any form of Housing Benefit will be making rental contributions
  • Where the property is valued and/or purchased at a value less than £75,000
  • Where the property will be let to a close relativeMore infoToolTip on focus or where the applicant(s) intend to live in the property in the future
  • To debt consolidate
  • Use of the loan for bridging finance
  • Business investments, payment of taxes, replenishment of savings and investment in timeshares

Source of deposit

For property purchases applicants must provide a deposit from their own resources.

The following exceptions apply:

  • family sale purchases at a discounted price where a loan for the full purchase price (e.g. no deposit) may be considered
  • a gifted deposit from close relativesMore infoToolTip on focus. The deposit must be a genuine unconditional gift and must not be secured by a charge or in any other way

Maximum repayment term

Maximum repayment term requirements apply to all loan types. The maximum repayment term is 35 years.

The maximum term may be restricted by the maximum age restrictions.

Repayment types

The following repayment types are acceptable:

  • Repayment (also known as Capital and Interest repayment)
  • Interest-only
  • Any combination of the above

Offer validity

Offers of advance for purchases (including Transfers of Equity) are valid for a period of six months from the date of application.

Offers of advance for remortgages and further advances are valid for a period of four months from the date of application.

Please note: Where there is a simultaneous request for a further advance and a transfer of equity, the Transfer of Equity offer will be valid for 6 months and the further advance offer will be valid for four months.

Mortgage offers will not be extended, completion of the mortgage must take place by the mortgage offer expiry date.

Remortgaging criteria

The property must have been owned by the applicant(s) for a minimum period of six months prior to application date, except where the property has been inherited by the new owners. Applications to remortgage a property currently used as a main residence on a Buy to Let basis are not acceptable.

Acceptable capital raising purposes

We accept the following loan purposes (subject to loan amount and LTV limits):

  • To pay for improvements/repairs to the let property or any other property owned by the applicant
  • To purchase the equity of another party to the mortgage
  • To extend the leasehold title of the property in mortgage to us
  • To purchase additional land

Portability criteria

Portability means that your client can move (or 'port') their existing mortgage scheme to purchase a new property.

Our porting policy varies according to the customer's type of mortgage scheme. Please contact the Intermediary Development Team on 0800 121 7788 (selecting option 2) for any porting queries.

Accountant's certificate for directors with 20% or more shares

Figures must be final, not draft or projected.

We require the following information:

  • Company name
  • Nature of business
  • Date business started
  • Year ending*
  • Turnover
  • Net profit**
  • Applicant's gross share of the net profit
  • Dividends
  • Salary***
  • Spouse's salary

We will also ask the following questions:

  • If profits/drawings/salary/dividends are not level an explanation will need to be provided
  • If drawings/salary/dividends exceed net profit an explanation will need to be provided
  • In your opinion, is the amount of drawings/salary supported by the ongoing performance of the business?
  • Please confirm that cash flow projections are sufficient to support the forecast growth of the business
  • In your opinion, are the level of drawings/dividends sustainable to allow the business to grow and continue to be profitable?
  • Are there any significant exceptional one-off items of income or expenditure, not expected to recur, reported within the net profit of the periods reported? Details of any such items will need to be provided
  • If applicable, please provide a breakdown or the source of the applicant's additional income and specify any other factors which may affect the future profitability.
*Where the accountant's certificate shows the latest financial year over 12 months and up to 15 months old at the date of application, 6 months personal bank statements showing income received will be required to support the application.
**Net profit figures must be stated prior to dividends, after taking into account the applicant’s salary and after the deduction of Corporation Tax.
*** Salary is defined as the applicant’s gross salary excluding any benefit in kind (e.g. car benefit) or dividends.