TSB is handing out a new mortgage to help tenants buy their rented home. TSB is expanding its support for tenants looking to buy their rented home with the launch of a 5&5 concessionary mortgage option, the banking giant has confirmed on Friday (January 10).
This new scheme allows landlords to offer tenants a 5% discount on the property’s purchase price, with the buyer contributing a minimum five per cent deposit. This complements TSB’s existing 10% scheme, where landlords offer a 10% or greater discount, eliminating the need for a deposit from the tenant buyer.
The lender’s mortgage distribution director, Roland McCormack, said: “TSB concessionary mortgages are already helping customers to bridge the gap between renting and home ownership, making it easier for tenants to secure the property they already call home.
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“Increased mortgage costs mean many landlords want to release their gains and exit the market, and a 5% discount could be entirely offset by the savings on estate agency fees and not missing out on several months of rental payments.”
TSB said government data showed a third of landlords were planning to sell their rental properties in the next two years. This 5% option could, therefore, offset the 5% discount through savings on estate agent fees or paying several months of mortgage interest when the property is empty.
David Hollingworth, associate director at L&C Mortgages, explained: “Lenders can often accept this approach, enabling the mortgage to be taken against the full market value of the property. That could allow the buyer to purchase the property without even needing a deposit and to still be able to access lower [loan-to-value] mortgage rates, although some lenders will prefer to see some of the deposit coming from the buyer.”
With government data indicating that 31% of landlords plan to sell their rental properties within the next two years, TSB says the 5% discount option may prove more appealing to landlords.