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Buy to Let Lending Criteria 1.1

We pride ourselves in being transparent with our criteria so you know where you stand when submitting a case to us. Search for keywords or download the PDF to help find the answers you are looking for.

Displaying 15 of 15 categories.

Loan

Minimum loan

£40,000

Maximum loan Aggregated exposure limited to £25,000,000 subject to single asset exposure being limited to £5,000,000.
Term

Minimum 3 years.

Maximum 30 years. 

Repayment method Interest only and capital repayment options are available.
Maximum LTV

75%

Minimum loan

£40,000

Maximum loan Aggregated exposure limited to £25,000,000 subject to single asset exposure being limited to £5,000,000.
Term

Minimum 3 years.

Maximum 30 years. 

Repayment method Interest only and capital repayment options are available.
Maximum LTV

75%

Refinance

Re-mortgage Period

No minimum length since time of purchase.

Capital Raise

Considered for any legal purpose.

Capital raises of more than £150,000 or when more than 50% equity is being removed that are not in keeping with profile should have a satisfactory explanation.


Ex-pats can be considered if funds are being used for a further purchase of a UK asset.

Repaying a Bridge

Acceptable where the bridge was used to complete works or auction purchase.


In other scenarios we will need to understand the reason bridging finance was used.

To complete works Minor works (Décor/internal fittings/general upkeep etc) to the security property are permitted where the value and structural integrity of the building will not be compromised.

 

Re-mortgage Period

No minimum length since time of purchase.

Capital Raise

Considered for any legal purpose.

Capital raises of more than £150,000 or when more than 50% equity is being removed that are not in keeping with profile should have a satisfactory explanation.


Ex-pats can be considered if funds are being used for a further purchase of a UK asset.

Repaying a Bridge

Acceptable where the bridge was used to complete works or auction purchase.


In other scenarios we will need to understand the reason bridging finance was used.

To complete works Minor works (Décor/internal fittings/general upkeep etc) to the security property are permitted where the value and structural integrity of the building will not be compromised.

 

Purchase

Purchase Price 

Maximum loan available is calculated against the lower of the purchase price and valuation.

Undervalue Purchase

Subject to:

  • Acceptable when the difference in purchase price and market value is within 20% and the seller is unrelated to our customer
  • If the difference in market value and purchase price is over 20% then further investigation will be required
  • If there is evidence of stressed position of the seller then we cannot proceed.

Family related transfers at nil or below market value are acceptable with an acceptable explanation for the transaction with evidence that the family member is not in a distressed financial situation. We will
require:

  • Mortgage history/credit search (at our discretion)
  • Letter of no interest
  • Clear bankruptcy search against outgoing owner
  • Declaration of Solvency
  • Indemnity policy

Transfers from associated Ltd companies at less than market value are unacceptable.

Increase in value since vendor purchased – For purchases where there has been a substantial increase in value since purchase, we require a written explanation which should be referred to the valuer for comment and validation.

When there is evidence of an option to purchase agreement and we can understand the reason for the for the purchase price being less than the Market valuer we can consider lending against the higher figure.

Portfolio undervalue

Can be considered when we lend no more than 75% of the value and 90% of purchase price. The minimum portfolio value should exceed £1.25m

Deposit

Source and Details

  • Personal Savings
    Evidence of build-up of funds

  • Gift
    Acceptable subject to evidence that the third party will hold no interest on the security

  • Directors Loan
    Acceptable subject to transfer at full MV

  • Additional Borrowing
    Details of the loan offer should be obtained for an assessment to be made on affordability

  • Vendor Deposits and 2nd Charges
    Not acceptable

  • Builders Incentives
    LTV reduced by 5%

  • Bounce Back Loans
    Are an acceptable form of deposit with supporting evidence of funds within bank statements. These are subject to the loan being used for the benefit of the business.

  • Mini-Bonds
    Not Acceptable

 

Purchase Price 

Maximum loan available is calculated against the lower of the purchase price and valuation.

Undervalue Purchase

Subject to:

  • Acceptable when the difference in purchase price and market value is within 20% and the seller is unrelated to our customer
  • If the difference in market value and purchase price is over 20% then further investigation will be required
  • If there is evidence of stressed position of the seller then we cannot proceed.

Family related transfers at nil or below market value are acceptable with an acceptable explanation for the transaction with evidence that the family member is not in a distressed financial situation. We will
require:

  • Mortgage history/credit search (at our discretion)
  • Letter of no interest
  • Clear bankruptcy search against outgoing owner
  • Declaration of Solvency
  • Indemnity policy

Transfers from associated Ltd companies at less than market value are unacceptable.

Increase in value since vendor purchased – For purchases where there has been a substantial increase in value since purchase, we require a written explanation which should be referred to the valuer for comment and validation.

When there is evidence of an option to purchase agreement and we can understand the reason for the for the purchase price being less than the Market valuer we can consider lending against the higher figure.

Portfolio undervalue

Can be considered when we lend no more than 75% of the value and 90% of purchase price. The minimum portfolio value should exceed £1.25m

Deposit

Source and Details

  • Personal Savings
    Evidence of build-up of funds

  • Gift
    Acceptable subject to evidence that the third party will hold no interest on the security

  • Directors Loan
    Acceptable subject to transfer at full MV

  • Additional Borrowing
    Details of the loan offer should be obtained for an assessment to be made on affordability

  • Vendor Deposits and 2nd Charges
    Not acceptable

  • Builders Incentives
    LTV reduced by 5%

  • Bounce Back Loans
    Are an acceptable form of deposit with supporting evidence of funds within bank statements. These are subject to the loan being used for the benefit of the business.

  • Mini-Bonds
    Not Acceptable

 

Customers

Age

Customers (including beneficiaries and guarantors) must be a minimum of 21 years of age at the start of the mortgage and no older than 80 years of age at the start of the mortgage, and the youngest applicant
must be no older than 95 years of age at the end of the mortgage term.

Customer Type
  • Individuals (UK, EU and other foreign nationals residing in the UK, see ID section)
  • LTD Company (UK Incorporated)
  • PLC (UK Incorporated)
  • LLP (UK Incorporated)
  • Trusts (Minimum Loan size £1m new loans, Refinances case by case)
  • SIPPS (Minimum Loan size £1m)
  • Ex-pats
Ltd, LLP or PLC For company applications where shareholding is owned by another company, it will be necessary to trace back the ultimate beneficial owners and obtain the relevant personal guarantees.
Personal Guarantees As a minimum, a personal guarantee equal to 25% or £50,000 (whichever is higher) of the loan size will be required from all directors where they have 25% or more shareholding.
Incorporations of BTL Portfolios Considered by referral subject to the following being to our satisfaction
  • Partnership Accounts, Tax Returns, Partnership Agreements and partnership Bank Statements
  • Accountant’s Advice Letter
  • Minimum of 10 BTL Properties
  • Business purchases are acceptable in England, Scotland & Wales
Credit Status CCJs
  • No unsatisfied in the last 24 months
  • Satisfied in the last 12 months considered by exception
  • Large (>£5,000) historic considered by exception

Mortgage / Secured Loan / Tenancy Arrears
0 missed in the last 12 months

Defaults
No unsatisfied >£100 in last 24 months

Unsecured borrowing (not including communications suppliers or utility companies)
No more than 3 instances of arrears or arrangements to pay in last 12 months

Bankruptcy/CVA/IVA
Discharged for at least 12 months

CIFAs
No adverse fraud data

Business Credit Profile
No history of the following within the last 36 months (this extends to associated companies)

  • Receivership
  • Administration order
  • Winding up petition
  • Creditors or Compulsory Liquidation
  • Disqualified director
Experience

Property Type: Residential 

  • Experienced Landlords & First Time Landlords
    First time landlords are acceptable, but the client cannot be a first-time property buyer.

Property Type: Small HMOs

  • Experienced Landlords
    At least 1 HMO property for a minimum of 12 months OR 1 other BTL property.
  • First Time Landlords
    Not Acceptable

Property Type: Large HMOs

  • Experienced Landlords
    At least 1 similar sized HMO or property with equivalent numbers of beds for a minimum of 12 months
  • First Time Landlords
    Not Acceptable

Property Type: Ex-pats

  • Experienced Landlords
    At least 1 UK investments properties for a minimum of 12 months and at least 1 applicant to have a minimum income of £50,000
  • First Time Landlords
    Not Acceptable

Property Type: Portfolio Landlords

  • Experienced Landlords
    Successful track record of owing relevant properties in the same sector
  • First Time Landlords
    Not Acceptable

 

Age

Customers (including beneficiaries and guarantors) must be a minimum of 21 years of age at the start of the mortgage and no older than 80 years of age at the start of the mortgage, and the youngest applicant
must be no older than 95 years of age at the end of the mortgage term.

Customer Type
  • Individuals (UK, EU and other foreign nationals residing in the UK, see ID section)
  • LTD Company (UK Incorporated)
  • PLC (UK Incorporated)
  • LLP (UK Incorporated)
  • Trusts (Minimum Loan size £1m new loans, Refinances case by case)
  • SIPPS (Minimum Loan size £1m)
  • Ex-pats
Ltd, LLP or PLC For company applications where shareholding is owned by another company, it will be necessary to trace back the ultimate beneficial owners and obtain the relevant personal guarantees.
Personal Guarantees As a minimum, a personal guarantee equal to 25% or £50,000 (whichever is higher) of the loan size will be required from all directors where they have 25% or more shareholding.
Incorporations of BTL Portfolios Considered by referral subject to the following being to our satisfaction
  • Partnership Accounts, Tax Returns, Partnership Agreements and partnership Bank Statements
  • Accountant’s Advice Letter
  • Minimum of 10 BTL Properties
  • Business purchases are acceptable in England, Scotland & Wales
Credit Status CCJs
  • No unsatisfied in the last 24 months
  • Satisfied in the last 12 months considered by exception
  • Large (>£5,000) historic considered by exception

Mortgage / Secured Loan / Tenancy Arrears
0 missed in the last 12 months

Defaults
No unsatisfied >£100 in last 24 months

Unsecured borrowing (not including communications suppliers or utility companies)
No more than 3 instances of arrears or arrangements to pay in last 12 months

Bankruptcy/CVA/IVA
Discharged for at least 12 months

CIFAs
No adverse fraud data

Business Credit Profile
No history of the following within the last 36 months (this extends to associated companies)

  • Receivership
  • Administration order
  • Winding up petition
  • Creditors or Compulsory Liquidation
  • Disqualified director
Experience

Property Type: Residential 

  • Experienced Landlords & First Time Landlords
    First time landlords are acceptable, but the client cannot be a first-time property buyer.

Property Type: Small HMOs

  • Experienced Landlords
    At least 1 HMO property for a minimum of 12 months OR 1 other BTL property.
  • First Time Landlords
    Not Acceptable

Property Type: Large HMOs

  • Experienced Landlords
    At least 1 similar sized HMO or property with equivalent numbers of beds for a minimum of 12 months
  • First Time Landlords
    Not Acceptable

Property Type: Ex-pats

  • Experienced Landlords
    At least 1 UK investments properties for a minimum of 12 months and at least 1 applicant to have a minimum income of £50,000
  • First Time Landlords
    Not Acceptable

Property Type: Portfolio Landlords

  • Experienced Landlords
    Successful track record of owing relevant properties in the same sector
  • First Time Landlords
    Not Acceptable

 

Landlord Type

Portfolio Landlord (4+ properties)

A Customer with four or more mortgaged buy to let properties either jointly or separately owned.

Enhanced checks are required in addition to the standard application requirements

Requirements & Assessment:

Portfolio Schedule

  • Evaluation that the outside portfolio is geared no higher than 75% LTV
  • Affordability check to ensure the portfolio can meet a stressed interest rate at 5.5% with a minimum 125% cover

Business Bank Statements

  • Review rental streams and ensure enough cash flow is evidenced
  • For Landlords with 4-9 properties, instead of requesting Bank Statements we may be able to verify cashflow
    automatically. If data is not available, then Business Bank Statements will be required

Assets and Liabilities Form

  • Understanding of outside financial position

 

Non-Portfolio Landlord (1-3 properties)

A Customer with no more than 3 mortgaged properties either with Shawbrook or other borrowing entities.


Standard Application requirements with no portfolio check required. If the Credit search shows more mortgages than declared, an explanation as to why will be required.

 

Portfolio Landlord (4+ properties)

A Customer with four or more mortgaged buy to let properties either jointly or separately owned.

Enhanced checks are required in addition to the standard application requirements

Requirements & Assessment:

Portfolio Schedule

  • Evaluation that the outside portfolio is geared no higher than 75% LTV
  • Affordability check to ensure the portfolio can meet a stressed interest rate at 5.5% with a minimum 125% cover

Business Bank Statements

  • Review rental streams and ensure enough cash flow is evidenced
  • For Landlords with 4-9 properties, instead of requesting Bank Statements we may be able to verify cashflow
    automatically. If data is not available, then Business Bank Statements will be required

Assets and Liabilities Form

  • Understanding of outside financial position

 

Non-Portfolio Landlord (1-3 properties)

A Customer with no more than 3 mortgaged properties either with Shawbrook or other borrowing entities.


Standard Application requirements with no portfolio check required. If the Credit search shows more mortgages than declared, an explanation as to why will be required.

 

ID and Residence

Residential Status

Applications are acceptable from UK nationals residing in the UK and EU/EEA and other foreign nationals residing in the UK. Ex-pats (UK nationals living or working outside of the UK) are acceptable subject to expat experience criteria.

Applications from foreign nationals residing outside of the UK where there is no UK based joint applicant cannot be accepted.

Proof of Address and ID

Shawbrook uses an automated system for identity and address verification, if this fails or the applicant resides abroad, acceptable evidence will be required.

All customers must provide certified signature ID.

ILA

We will require the following to have independent legal advice:

  • Customers over 70 years old
  • A customer who will not benefit from the proceeds of the advance.
  • A customer who is on the mortgage application but not named on the title
Residential Status

Applications are acceptable from UK nationals residing in the UK and EU/EEA and other foreign nationals residing in the UK. Ex-pats (UK nationals living or working outside of the UK) are acceptable subject to expat experience criteria.

Applications from foreign nationals residing outside of the UK where there is no UK based joint applicant cannot be accepted.

Proof of Address and ID

Shawbrook uses an automated system for identity and address verification, if this fails or the applicant resides abroad, acceptable evidence will be required.

All customers must provide certified signature ID.

ILA

We will require the following to have independent legal advice:

  • Customers over 70 years old
  • A customer who will not benefit from the proceeds of the advance.
  • A customer who is on the mortgage application but not named on the title

Affordability

Minimum debt service cover ratios (DSCR)

The loan must meet the minimum debt service cover ratios (DSCR) in order to confirm affordability. Please download the PDF version of our criteria guide for full details

Vacant Units

Are acceptable if the property is a multi-unit block or large HMO and the DSCR is not met based on the received rental, we would like to understand how the client intends to service the loan before tenants are found.

Capital and Interest

Loan amounts will be calculated on an interest only basis although for borrowers who wish to have a C&I loan this can be accommodated subject to evidence of supporting income to cover the difference.

Outside income

Should the rental income from the security provide less than the required minimum ICR then outside income can be used to support ICR requirements. The use of outside income is subject to a minimum
110% ICR being received from the property

Acceptable Proof of Income is required together with an asset and liability statement and an Income and expenditure statement.

When assessing expenditure, the following is deducted from the net income position:

  • Credit commitments – this should include all mortgages (which should be stressed accordingly), credit cards, finance agreements and loans. The declared amounts should be checked against available sources such as bank statements and credit search data
  • Essential living costs – to include food, utilities, council tax, phone bills, ground rent, service charge, essential travel and childcare. These should be declared by the borrower in their I&E
  • Other committed expenditure – such as school fees, child maintenance
Minimum debt service cover ratios (DSCR)

The loan must meet the minimum debt service cover ratios (DSCR) in order to confirm affordability. Please download the PDF version of our criteria guide for full details

Vacant Units

Are acceptable if the property is a multi-unit block or large HMO and the DSCR is not met based on the received rental, we would like to understand how the client intends to service the loan before tenants are found.

Capital and Interest

Loan amounts will be calculated on an interest only basis although for borrowers who wish to have a C&I loan this can be accommodated subject to evidence of supporting income to cover the difference.

Outside income

Should the rental income from the security provide less than the required minimum ICR then outside income can be used to support ICR requirements. The use of outside income is subject to a minimum 110% ICR being received from the property

Acceptable Proof of Income is required together with an asset and liability statement and an Income and expenditure statement.

When assessing expenditure, the following is deducted from the net income position:

  • Credit commitments – this should include all mortgages (which should be stressed accordingly), credit cards, finance agreements and loans. The declared amounts should be checked against
    available sources such as bank statements and credit search data
  • Essential living costs – to include food, utilities, council tax, phone bills, ground rent, service charge, essential travel and childcare. These should be declared by the borrower in their I&E
  • Other committed expenditure – such as school fees, child maintenance

Security

Security Summary

Shawbrook must have 1st legal charge.

Location

England, Scotland, Wales.

Tenure

Freehold and Feuhold (in Scotland) acceptable.
Leasehold with minimum 50 years remaining at the end of the mortgage term is acceptable.

Tenancy

An assured shorthold tenancy agreement (AST) for a period of between 6 to 12 months is required. Protected tenancies are considered subject to demand for resale as confirmed by the valuer.


See also "Other" for Holiday Lets, Serviced Apartments and Airbnb and Local Authority and Vulnerable Tenants.

Demand for Sale

Unless stated differently below by asset type 75% LTV Interest Only is permitted on all security when sales are achievable within 12 months.

Demand for Letting

Unless stated differently below by asset type 75% LTV Interest Only is permitted on all security when letting is achievable within 6 months.

Security Summary

Shawbrook must have 1st legal charge.

Location

England, Scotland, Wales.

Tenure

Freehold and Feuhold (in Scotland) acceptable.
Leasehold with minimum 50 years remaining at the end of the mortgage term is acceptable.

Tenancy

An assured shorthold tenancy agreement (AST) for a period of between 6 to 12 months is required. Protected tenancies are considered subject to demand for resale as confirmed by the valuer.


See also "Other" for Holiday Lets, Serviced Apartments and Airbnb and Local Authority and Vulnerable Tenants.

Demand for Sale

Unless stated differently below by asset type 75% LTV Interest Only is permitted on all security when sales are achievable within 12 months.

Demand for Letting

Unless stated differently below by asset type 75% LTV Interest Only is permitted on all security when letting is achievable within 6 months.

Flats

Flats in Blocks/entire blocks of flats

Flats located within blocks are acceptable subject to usual criteria. If the block is over 5 storeys, it must have a lift.


Multiple flats/entire blocks of flats can be considered. Please refer to Valuation Methodology section.


Individual flats within cladded blocks or entire cladded blocks of flats are unacceptable without a satisfactory EWS1 form.

Size of Flats

Minimum size for flats is 30 square metres. When we are lending on blocks of flats, if the individual flats are less than 30 square metres, aggregated individual values cannot be used, only the investment block value can be used.

Ex-Local Authority Flats

Acceptable up to 65% LTV in blocks up to 4 storeys subject to sales demand being achievable within 12 months.


Acceptable up to 65% LTV in a block of more than 4 storeys in Greater London subject to sales demand being achievable within 12 months.


Individual flats within cladded blocks or entire cladded blocks of flats are unacceptable without a satisfactory EWS1 form.

Flats Above Commercial

Acceptable to 75% LTV subject to sales demand being achievable within 12 months.

 

Flats in Blocks/entire blocks of flats

Flats located within blocks are acceptable subject to usual criteria. If the block is over 5 storeys, it must have a lift.


Multiple flats/entire blocks of flats can be considered. Please refer to Valuation Methodology section.


Individual flats within cladded blocks or entire cladded blocks of flats are unacceptable without a satisfactory EWS1 form.

Size of Flats

Minimum size for flats is 30 square metres. When we are lending on blocks of flats, if the individual flats are less than 30 square metres, aggregated individual values cannot be used, only the investment block value can be used.

Ex-Local Authority Flats

Acceptable up to 65% LTV in blocks up to 4 storeys subject to sales demand being achievable within 12 months.


Acceptable up to 65% LTV in a block of more than 4 storeys in Greater London subject to sales demand being achievable within 12 months.


Individual flats within cladded blocks or entire cladded blocks of flats are unacceptable without a satisfactory EWS1 form.

Flats Above Commercial

Acceptable to 75% LTV subject to sales demand being achievable within 12 months.

 

HMO

Size

Small HMO defined as those having up to max 6 occupants maximum 75% LTV Interest Only subject to sales demand being achievable within 12 months.


Large HMO defined as those having greater than 6 Occupants maximum 75% LTV Interest Only subject to sales demand being achievable within 12 months.

Licenses

Refinances - All HMO refinances will be subject to the customer having an HMO licence (when a licence is applicable) or where recent works have been completed the property being confirmed as viable for an HMO licence by the valuer.

Purchases - All HMO purchases will be subject to the Valuation report confirming the property is a viable HMO.

Student Accommodation

Small HMOs used for student accommodation are acceptable in line with HMO criteria. Student units and sui Generis HMOs are considered on a case by case basis.

 

Size

Small HMO defined as those having up to max 6 occupants maximum 75% LTV Interest Only subject to sales demand being achievable within 12 months.


Large HMO defined as those having greater than 6 Occupants maximum 75% LTV Interest Only subject to sales demand being achievable within 12 months.

Licenses

Refinances - All HMO refinances will be subject to the customer having an HMO licence (when a licence is applicable) or where recent works have been completed the property being confirmed as viable for an HMO licence by the valuer.

Purchases - All HMO purchases will be subject to the Valuation report confirming the property is a viable HMO.

Student Accommodation

Small HMOs used for student accommodation are acceptable in line with HMO criteria. Student units and sui Generis HMOs are considered on a case by case basis.

 

Unacceptable Security

Unacceptable Security
  • Cladded blocks without a satisfactory EWS1 form
  • Freehold flats
  • Holiday parks
  • Land
  • Development sites
  • Hostels
  • Live work units
  • Equestrian centres
  • Grade 1 Listed
  • Grade A (Scotland)
  • Kennels & Catteries
  • Ex/current petrol stations
  • Holiday lets in holiday / sports parks
  • Properties with no valid EPC rating or rating below E (unless exempt)

 

Unacceptable Security
  • Cladded blocks without a satisfactory EWS1 form
  • Freehold flats
  • Holiday parks
  • Land
  • Development sites
  • Hostels
  • Live work units
  • Equestrian centres
  • Grade 1 Listed
  • Grade A (Scotland)
  • Kennels & Catteries
  • Ex/current petrol stations
  • Holiday lets in holiday / sports parks
  • Properties with no valid EPC rating or rating below E (unless exempt)

 

Other

Flying/Creeping Freehold

The maximum amount of flying or creeping freehold that we can consider is 15%.

Second Charge

2nd charges are acceptable on residential property up to 70% LTV (Taking into account the 1st charge balance) with a minimum of £25,000 equity being attributed to the 2nd charge property; Subject to maximum loan of 100% of the lower of the value or purchase price of the 1st charge security.

Subsequent Charges Required when:
  • The customer owns additional neighbouring property which shares the same access way, rights of support and services as the security property (this would be common in terraced housing or neighbouring parcels of land). These subsequent charges to be registered on the neighbouring properties/land do not need to be first ranking charges.

  • We are offered long leasehold security and the customer or a related company/person owns the freehold. In these cases a charge over the freehold is also required.
Solar Panel

Acceptable subject to valuer commentary and terms of the lease arrangement (when solar panels owned by third party).

Japanese Knotweed

These can be considered on a case by case basis subject to evidence of implementation of a professional treatment plan with insurance backed guarantee.

Ground Rents

Excessive grounds rents or ground rents that have steep step ups are unacceptable.

Concentration by Volume

Shawbrook consider property postcode on a case by case basis being considerate to the customer Shawbrook and non-Shawbrook portfolio.

Regulation 

Shawbrook cannot consider applications that may be deemed as regulated transactions. These also include:

  • The Customer intends to reside in the property taken as security and the residential element of the security (including associated land) forms more than 40% of the total floor area of the entire security (including land)
  • Applications where our customer or a relative of the customer resides or has resided at the security in the last 12 months and intend to move back there in the future
  • Ex-pat applications if the customer intends to move in to the security upon their return to the UK
  • Applications when the current vendor will occupy the security after completion, and this equates to more than 40%
  • HMO accommodation where a family member or the customer resides
Consumer BTL

Unacceptable. The following type of applications will be considered as consumer BTLs in line with the Mortgage Credit Directive Order:

  • The client does not own any other BTL properties, and we are offered either a property inherited or the property they, or a related person, previously resided at.
  • If the borrower is a first-time landlord and the transaction is a Let to Buy
Non-Standard Construction
  • Any Prefabricated Reinforced Concrete (PRC) dwelling which has not been repaired under the PRC (Homes) Ltd licensed repair scheme is unacceptable
  • Wimpey No-fines are acceptable, other no-fines systems are unacceptable
  • Laing Easiform built after 1945 are acceptable
  • Steel Framed Dwellings are acceptable if readily marketable and mortgageable
  • Large Panel Systems (LPS) are unacceptable
  • Timber Framed Dwellings built prior to 1970 are unacceptable, properties built after 1970 but without brick/rendered block external facings are considered on their individual merits
  • Mundic properties are acceptable only if a Concrete Screening Test has been prepared strictly in accordance with the latest RICS Guidance and the concrete has been classified as A or A/B. Suspect concrete purpose-built and converted flats will not be considered acceptable, unless the entire block has been tested and the concrete classified as A or A/B
  • Thatched roof properties considered on their individual merits
Modern Methods of Constructions

The following sustainable construction types are acceptable for buildings constructed 2010 or later:

  • Structural Insulated Panels (SIPs)
  • Insulated Concrete Formwork (ICF)
  • ThermoPlan
  • Kingspan TEK Haus
  • Beco Wallform
  • Cidark P3 System
  • Durisol Block
  • Rockwool Duo Slab
  • Hemcrete/Hempcrete
  • HufHaus

Suitable warranty documentation and architects sign off (including details of that architects PII) are required. Other modern/sustainable methods of construction can be considered on a case by case basis

Holiday Lets, Serviced Apartments and Airbnb
  • Single dwelling houses and flats only, multi-unit blocks of serviced apartments are not allowed

  • Property must be in a location with a letting demand for an assumed 6-month AST, specialist holiday lets in remote locations where there is no long term tenant demand are unacceptable

  • Assumed AST rental income will be used for affordability and viability of exit assessment
Local Authority and Vulnerable Tenants

Acceptable subject to:

  • Lease with a professional operator of emergency housing
  • Lease that includes:
    • An open market rent with a standard rent review terms including rent review frequency
    • A prohibition on structural alterations
    • Standard landlord obligations 
      (Please note this list is non exhaustive and please refer to the broker hub for a fuller list of non-acceptable lease term issues.)
  • Assumption of a standard AST from a private rented sector tenants for affordability and viability of exit assessment (as opposed to lease rental income)
  • Property to be valued as a standard house or an HMO with no premium attributed to the lease
  • A Commercial Valuation

Private tenants in receipt of Housing Benefit or Universal Credit are also acceptable

 

Flying/Creeping Freehold

The maximum amount of flying or creeping freehold that we can consider is 15%.

Second Charge

2nd charges are acceptable on residential property up to 70% LTV (Taking into account the 1st charge balance) with a minimum of £25,000 equity being attributed to the 2nd charge property; Subject to maximum loan of 100% of the lower of the value or purchase price of the 1st charge security.

Subsequent Charges Required when:
  • The customer owns additional neighbouring property which shares the same access way, rights of support and services as the security property (this would be common in terraced housing or neighbouring parcels of land). These subsequent charges to be registered on the neighbouring properties/land do not need to be first ranking charges.

  • We are offered long leasehold security and the customer or a related company/person owns the freehold. In these cases a charge over the freehold is also required.
Solar Panel

Acceptable subject to valuer commentary and terms of the lease arrangement (when solar panels owned by third party).

Japanese Knotweed

These can be considered on a case by case basis subject to evidence of implementation of a professional treatment plan with insurance backed guarantee.

Ground Rents

Excessive grounds rents or ground rents that have steep step ups are unacceptable.

Concentration by Volume

Shawbrook consider property postcode on a case by case basis being considerate to the customer Shawbrook and non-Shawbrook portfolio.

Regulation 

Shawbrook cannot consider applications that may be deemed as regulated transactions. These also include:

  • The Customer intends to reside in the property taken as security and the residential element of the security (including associated land) forms more than 40% of the total floor area of the entire security (including land)
  • Applications where our customer or a relative of the customer resides or has resided at the security in the last 12 months and intend to move back there in the future
  • Ex-pat applications if the customer intends to move in to the security upon their return to the UK
  • Applications when the current vendor will occupy the security after completion, and this equates to more than 40%
  • HMO accommodation where a family member or the customer resides
Consumer BTL

Unacceptable. The following type of applications will be considered as consumer BTLs in line with the Mortgage Credit Directive Order:

  • The client does not own any other BTL properties, and we are offered either a property inherited or the property they, or a related person, previously resided at.
  • If the borrower is a first-time landlord and the transaction is a Let to Buy
Non-Standard Construction
  • Any Prefabricated Reinforced Concrete (PRC) dwelling which has not been repaired under the PRC (Homes) Ltd licensed repair scheme is unacceptable
  • Wimpey No-fines are acceptable, other no-fines systems are unacceptable
  • Laing Easiform built after 1945 are acceptable
  • Steel Framed Dwellings are acceptable if readily marketable and mortgageable
  • Large Panel Systems (LPS) are unacceptable
  • Timber Framed Dwellings built prior to 1970 are unacceptable, properties built after 1970 but without brick/rendered block external facings are considered on their individual merits
  • Mundic properties are acceptable only if a Concrete Screening Test has been prepared strictly in accordance with the latest RICS Guidance and the concrete has been classified as A or A/B. Suspect concrete purpose-built and converted flats will not be considered acceptable, unless the entire block has been tested and the concrete classified as A or A/B
  • Thatched roof properties considered on their individual merits
Modern Methods of Constructions

The following sustainable construction types are acceptable for buildings constructed 2010 or later:

  • Structural Insulated Panels (SIPs)
  • Insulated Concrete Formwork (ICF)
  • ThermoPlan
  • Kingspan TEK Haus
  • Beco Wallform
  • Cidark P3 System
  • Durisol Block
  • Rockwool Duo Slab
  • Hemcrete/Hempcrete
  • HufHaus

Suitable warranty documentation and architects sign off (including details of that architects PII) are required. Other modern/sustainable methods of construction can be considered on a case by case basis

Holiday Lets, Serviced Apartments and Airbnb
  • Single dwelling houses and flats only, multi-unit blocks of serviced apartments are not allowed

  • Property must be in a location with a letting demand for an assumed 6-month AST, specialist holiday lets in remote locations where there is no long term tenant demand are unacceptable

  • Assumed AST rental income will be used for affordability and viability of exit assessment
Local Authority and Vulnerable Tenants

Acceptable subject to:

  • Lease with a professional operator of emergency housing
  • Lease that includes:
    • An open market rent with a standard rent review terms including rent review frequency
    • A prohibition on structural alterations
    • Standard landlord obligations 
      (Please note this list is non exhaustive and please refer to the broker hub for a fuller list of non-acceptable lease term issues.)
  • Assumption of a standard AST from a private rented sector tenants for affordability and viability of exit assessment (as opposed to lease rental income)
  • Property to be valued as a standard house or an HMO with no premium attributed to the lease
  • A Commercial Valuation

Private tenants in receipt of Housing Benefit or Universal Credit are also acceptable

 

Valuation

Valuation

A Bank appointed valuation report addressed to the Bank from the pre-approved panel of surveyors with sufficient PI cover must be held or an Automated Valuation Model (AVM).

Validity of Report

Valuations are valid for 6 months.

Qualifications
  • Fellow of the Royal Institution of Chartered Surveyors (FRICS)
  • Member of the Royal Institute of Chartered Surveyors (MRICS)
Automated Valuations

AVMs can be considered for security when the following standards are met:

  • Single-unit residential property and small HMOs valued on a single dwelling basis
  • If the purchase price is lower than the market valuation we can ignore the AVM confidence level and apply max LTV (75%) to the purchase price.
  • Maximum value £2m in London and the South East, £1m elsewhere
  • Maximum LTV and minimum confidence levels for capital value shall be in accordance with the section below
  • England, Wales and Scotland
  • No property above or adjoining commercial premises
  • Freehold or minimum unexpired 85-years leasehold
  • No converted flats
  • Flats in blocks up to 4 storeys (for flats in blocks of more than 4 storeys a full valuation report is required
  • No new-build property built within last 24 months
  • Report is valid for 6 months
Automated Maximum LTV and Minimum Confidence Levels

Max LTV: 75%

  • Minimum Confidence Levels (value): >5.0
  • Minimum Confidence Levels (rental): 4.0

Max LTV: 65% - 74%

  • Minimum Confidence Levels (value): 4.0 - 4.9
  • Minimum Confidence Levels (rental): 4.0

Max LTV: 55% - 64%

  • Minimum Confidence Levels (value): 3.0 - 3.9
  • Minimum Confidence Levels (rental): 4.0

Max LTV: Up to 55%

  • Minimum Confidence Levels (value): Min 3
  • Minimum Confidence Levels (rental): 4.0

LTV calculated against the corresponding CL i.e. 4.9CL = 74% LTV. Rental Confidence between 4-4.9 require a second automated verification.

Valuation Methodology

Security Type and What Values we use:

Single Residential Flat/House
Open Market Value confirmed by the surveyor or an AVM

Block of Flats (up to 10)
Individual values of the flats can be used on an aggregated basis subject to individual leaseholds sales demand being within 12months.

Block of Flats (11 and more)
Investment block value must be used.

Small HMO (up to 6 tenants)
If the property is being used as an HMO, but the works to convert it
back to a single-family dwelling are minimal, then a single dwelling
value based on direct comparable evidence will be used.

If the property has been extensively adapted to meet HMO
legislation (e.g. changes to room sizes or added en-suite facilities) then valuer will reflect the premium element either by yield-based investment valuation or purchase price plus costs of works approach.

Small HMO (up to 6 tenants) in an Article 4 Direction area
Yield-based investment valuation: valuer will consider comparable yields in the area and gross rental. Given that Article 4 Direction is in place, the property must hold C4 planning use.

Large HMO (7 and more tenants)
​Yield-based investment valuation: valuer will consider comparable yields in the area and gross rental. Planning must be in place for the property to be used as a large HMO (Sui Generis).​

Valuation

A Bank appointed valuation report addressed to the Bank from the pre-approved panel of surveyors with sufficient PI cover must be held or an Automated Valuation Model (AVM).

Validity of Report

Valuations are valid for 6 months.

Qualifications
  • Fellow of the Royal Institution of Chartered Surveyors (FRICS)
  • Member of the Royal Institute of Chartered Surveyors (MRICS)
Automated Valuations

AVMs can be considered for security when the following standards are met:

  • Single-unit residential property and small HMOs valued on a single dwelling basis
  • If the purchase price is lower than the market valuation we can ignore the AVM confidence level and apply max LTV (75%) to the purchase price.
  • Maximum value £2m in London and the South East, £1m elsewhere
  • Maximum LTV and minimum confidence levels for capital value shall be in accordance with the section below
  • England, Wales and Scotland
  • No property above or adjoining commercial premises
  • Freehold or minimum unexpired 85-years leasehold
  • No converted flats
  • Flats in blocks up to 4 storeys (for flats in blocks of more than 4 storeys a full valuation report is required
  • No new-build property built within last 24 months
  • Report is valid for 6 months
Automated Maximum LTV and Minimum Confidence Levels

Max LTV: 75%

  • Minimum Confidence Levels (value): >5.0
  • Minimum Confidence Levels (rental): 4.0

Max LTV: 65% - 74%

  • Minimum Confidence Levels (value): 4.0 - 4.9
  • Minimum Confidence Levels (rental): 4.0

Max LTV: 55% - 64%

  • Minimum Confidence Levels (value): 3.0 - 3.9
  • Minimum Confidence Levels (rental): 4.0

Max LTV: Up to 55%

  • Minimum Confidence Levels (value): Min 3
  • Minimum Confidence Levels (rental): 4.0

LTV calculated against the corresponding CL i.e. 4.9CL = 74% LTV. Rental Confidence between 4-4.9 require a second automated verification.

Valuation Methodology

Security Type and What Values we use:

Single Residential Flat/House
Open Market Value confirmed by the surveyor or an AVM

Block of Flats (up to 10)
Individual values of the flats can be used on an aggregated basis subject to individual leaseholds sales demand being within 12 months.

Block of Flats (11 and more)
Investment block value must be used.

Small HMO (up to 6 tenants)
If the property is being used as an HMO, but the works to convert it
back to a single-family dwelling are minimal, then a single dwelling
value based on direct comparable evidence will be used.

If the property has been extensively adapted to meet HMO
legislation (e.g. changes to room sizes or added en-suite facilities) then valuer will reflect the premium element either by yield-based investment valuation or purchase price plus costs of works approach.

Small HMO (up to 6 tenants) in an Article 4 Direction area
Yield-based investment valuation: valuer will consider comparable yields in the area and gross rental. Given that Article 4 Direction is in place, the property must hold C4 planning use.

Large HMO (7 and more tenants)
​Yield-based investment valuation: valuer will consider comparable yields in the area and gross rental. Planning must be in place for the property to be used as a large HMO (Sui Generis).​

Specialist Reports

Specialist Reports Please download the PDF version of our criteria guide for full details
Specialist Reports Please download the PDF version of our criteria guide for full details

COVID-19

Off-Panel Valuations Not acceptable.
Valuation and Offer Extensions These cases will be re-underwritten rather than automatically extended.
Payment Holiday

New Lending & Product Switches

  • Where a customer requests any additional lending or a fundamental change to product, this will not be considered until they have completed their payment holiday and made at least two
    subsequent payments in full after the holiday expired
  • If a customer does not wish to wait until the end of the agreed payment holiday and are only part way through, they will need to cancel the payment holiday and make up any payments that
    have been deferred before we can consider any additional lending
  • They must also evidence sustainability of income during the holiday period via bank statements/up to date proof of income. Until this is provided, we cannot proceed or consider an
    application
  • Where a customer is requesting both additional lending and a payment holiday, they will need to select one of these options only – not both

If the client has requested a payment holiday from another lender, we can still consider lending to them if we are satisfied with their reasons for needing the payment holiday and the below requirements are
met:-

  • Clear CAIS/Insight data confirming no late payments and that the accounts have been performing as agreed with the current lender
  • If a payment holiday with another lender is in place, or has been previously, we will not require them to make up payments to the other lender
  • If there were any receipt of rentals during the payment holiday, we would require bank statements to support the build-up of cash reserves and evidence acceptable levels of voids. We understand that clients entered into payment holidays for various reasons in order to support their property portfolio
  • Standard portfolio assessment / stressing via eTech and due diligence needs to meet our standard criteria
  • Where other lenders are incorrectly reporting arrears on genuine holiday payments, we will need evidence of the error and that the customer is in an agreed payment holiday. The evidence must be supplied from the lender to confirm this
Off-Panel Valuations Not acceptable.
Valuation and Offer Extensions These cases will be re-underwritten rather than automatically extended.
Payment Holiday

New Lending & Product Switches

  • Where a customer requests any additional lending or a fundamental change to product, this will not be considered until they have completed their payment holiday and made at least two
    subsequent payments in full after the holiday expired
  • If a customer does not wish to wait until the end of the agreed payment holiday and are only part way through, they will need to cancel the payment holiday and make up any payments that
    have been deferred before we can consider any additional lending
  • They must also evidence sustainability of income during the holiday period via bank statements/up to date proof of income. Until this is provided, we cannot proceed or consider an
    application
  • Where a customer is requesting both additional lending and a payment holiday, they will need to select one of these options only – not both

If the client has requested a payment holiday from another lender, we can still consider lending to them if we are satisfied with their reasons for needing the payment holiday and the below requirements are
met:-

  • Clear CAIS/Insight data confirming no late payments and that the accounts have been performing as agreed with the current lender
  • If a payment holiday with another lender is in place, or has been previously, we will not require them to make up payments to the other lender
  • If there were any receipt of rentals during the payment holiday, we would require bank statements to support the build-up of cash reserves and evidence acceptable levels of voids. We understand that clients entered into payment holidays for various reasons in order to support their property portfolio
  • Standard portfolio assessment / stressing via eTech and due diligence needs to meet our standard criteria
  • Where other lenders are incorrectly reporting arrears on genuine holiday payments, we will need evidence of the error and that the customer is in an agreed payment holiday. The evidence must be supplied from the lender to confirm this