Lloyds to restrict buy-to-let loans

Lloyds Banking Group, the UK's biggest buy-to-let lender, is introducing new lending limits which will restrict landlords to a maximum of nine mortgages with a total value of up to £3m across all of its brands.

Lloyds' brands include Cheltenham & Gloucester, the former HBOS brands and Lloyds TSB.

In the past, buy-to-let investors had been able to take out up to nine mortgages from Lloyds TSB's Cheltenham & Gloucester arm, with a further nine from any of the former HBOS brands, with loans from both totalling up to £6m.

Lloyds, in which the Government has a 43% stake, defended the move, saying: "We are simply aligning lending criteria across both sides of the business."

The bank said it will honour existing loans that do not conform to the new criteria, but the move could make it harder for landlords to remortgage.

HBOS was already the UK's biggest buy-to-let lender before the tie-up, offering buy-to-let mortgages under its BM Solutions, Bank of Scotland, Halifax and The Mortgage Business brands.

A Lloyds Banking Group spokeswoman said: "Going forward, there will be one buy-to-let portfolio lending limit in place across all of the Lloyds Banking Group.

"Aligning the criteria in this way is the right thing to do. It allows us to manage portfolio lending consistently and effectively across the group."

Only 181 different products are currently available to investment landlords, down from 3,648 mortgages in July 2007, before the credit crunch first struck - a 95% drop.

Landlords have also failed to benefit fully from interest rate cuts, with the average rate charged on a two-year fixed rate buy-to-let mortgage edging down from 6.11% in July 2007 to 5.98%, despite the Bank of England base rate being cut to a record low of just 0.5%.

Ray Boulger, senior technical manager at John Charcol, said: "Lloyds Banking Group has got a share of over 50% of the buy-to-let market. Any move they make is critical.

"Effectively, the main impact of this is to reduce the options for people who are looking for new mortgages. By applying the lending criteria across all the brands it means that people will have less choice."

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