Yorkshire BS moving into the buy-to-let market

The Bradford-based building society said it would start off with low volumes by targeting landlords in the South East, before broadening the product’s availability later this year.

The mutual insisted it is the right time to target buy-to-let, despite the demise of high-profile buy-to-let lender Bradford & Bingley at the height of the financial crisis.

Buy-to-let landlords are benefiting from strong demand from tenants forced to rent instead of buy, with rental yields beating the record low Bank of England base rate.

The Yorkshire already has a £2bn portfolio of buy-to-let mortgages, acquired as part of its takeover of Chelsea Building Society last year. However, this will be the first time the UK’s second-biggest building society has launched its own buy-to-let products.

“We are doing this in a very prudent, controlled way,” said a Yorkshire spokeswoman. “Our objective is not particularly to grow our share of buy-to-let but as that (£2bn portfolio) pays back we will be doing new lending. We’re not looking particularly to increase our overall mix of business in buy-to-let.

“It’s another form of mortgage lending and it’s a popular form that our members are wanting as well.”

Roughly 10 per cent of the mutual’s £23bn mortgage book is comprised of buy-to-let mortgages.

The mortgages will be sold through two mortgage brokers – London & Country Mortgages and The Buy to Let Business.

Its initial products will be a two-year fixed rate at 4.29 per cent, based on loan of up to 65 per cent of the value of the property, plus a two-year fixed rate at 4.59 per cent, based on a 75 per cent loan-to-value. Both have a £995 fee.

Yorkshire’s head of buy-to-let, Jeremy Law, said: “As a financially strong independent mutual, our primary focus is, and always will be, the interests of our members. We will approach buy-to-let mortgages as we would with any other home loan, as a responsible and prudent lender.

“Initially, we plan to offer products for properties located in London and the South East to ensure a manageable entry into the market. However, we hope that we may be able to extend our geographical spread later in the year once we have our operation up and running.”