A gap between law and lender guidance
Not every lender has dragged its feet. Barclays, Saffron Building Society, and Nationwide have all published updated guidance confirming a periodic tenancy under the new regime satisfies their mortgage conditions. But others have been slower to act. Lloyds Bank’s customer-facing buy-to-let guidance, for instance, still opens with language built around the AST, with only a passing reference further down to tenancies that may be prescribed by legislation, hardly enough for a borrower reading it plainly to understand where they stand.
Mendes is direct about where he believes the bigger names should be. “You would have thought Lloyds, BM Solutions and so on would have been a little bit quicker to the mark,” he told Mortgage Introducer.
He acknowledged there is no simple explanation for why some large lenders have been slow while others have moved. “It’s hard to say honestly. We’ve seen people like Barclays, we’ve seen equally large lenders making those changes. Often what you might find, especially with some of these larger lenders, is the bureaucracy that goes on behind in the background in terms of making changes and getting it signed off and then getting it updated. And sometimes the other part is whoever’s in those relevant departments about being made aware of those changes.”
Drawing on his own experience inside a major bank, he added: “I’ve worked at Lloyds historically, a long time ago, and you’ve got so many different parties within the mechanics of it, and sometimes it could get lost in translation between so many people and who’s responsible for it.”
What brokers need to do
The more immediate problem is not whether borrowers are technically in breach – most will not be – but whether they understand what their mortgage conditions actually mean under the new law. As brokers brace for the buy-to-let reckoning on the wider implications of the Act, Mendes said closing this knowledge gap is now part of the broker’s job.