Nottingham BS’s mortgage changes allow landlords to sell to tenants

Landlords planning to sell a property directly to the tenant already living in it could find the process easier after new mortgage criteria were introduced to support discounted sales.

Nottingham Building Society has updated its lending rules to allow concessionary purchases from landlords.

This will enable a landlord to sell a home to the sitting tenant at a reduced price, where the discount forms part of the transaction.

The change reflects a route some landlords are now exploring when exiting the sector, particularly where tenants want to remain in the property and buy it themselves.

Landlords selling to tenants

The lender’s sales director, Matt Kingston, said: “These are changes rooted in what we’re hearing every day from brokers.

“Ex‑local authority flats form a huge part of the UK’s housing stock yet support for them remains patchy.

“Landlords are increasingly selling directly to tenants.

“Self‑employed customers are relying more on legitimate capital flows.”

He added: “By expanding our criteria, we’re removing unnecessary barriers, strengthening viable routes into homeownership, and giving brokers more confidence when placing cases that fall outside a narrow definition of ‘standard’.”

Buy ex-council flats

Alongside the concessionary purchase policy, lending will also be available on ex-local authority flats.

These are homes previously owned or managed as social housing but now operating within the private market.

Across the UK, that sector is estimated to include around one million properties.

The mutual will lend on those flats up to 85% loan-to-value.

The policy applies across residential and buy-to-let borrowing, opening access for first-time buyers purchasing former council flats, as well as landlords acquiring similar properties.

Lending criteria changes

There are also changes to how deposits can be structured when borrowers purchase property.

Housebuilder gifted deposits will now be accepted on new-build homes, although borrowers must contribute funds of their own alongside the gift.

Separately, repayment of a director’s loan can be used as a deposit source where a company repays money owed to a self-employed borrower and that repayment is fully evidenced.

That allows business owners to use funds owed to them by their company as part of their deposit when buying a property.

The criteria changes follow earlier adjustments to acceptable income types across the society’s residential, foreign national, returning expat and retirement interest-only ranges.

Income streams now recognised include agency and zero-hours work, certain state benefits and drawdown pensions.

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