Any of the following leases/letting types are ACCEPTABLE:
- England and Wales: Assured Shorthold Tenancy (AST) for a minimum term of 6 months and maximum term of 2 years. ASTs can continue to renew under a new contractual tenancy of the same or substantially the same terms until such time that it is brought to an end by the tenant or landlord.
- Scotland: Short Assured Tenancy for a minimum term of 6 months and maximum term of 2 years or of a type that allows vacant possession to be obtained on terms no less onerous than a standard Short Assured Tenancy.Private Residential Tenancy is also an acceptable tenancy type. Short Assured Tenancies can continue to renew under a new contractual tenancy of the same or substantially the same terms until such time that it is brought to an end by the tenant or landlord. All new tenancies must be Private Residential Tenancies.
- Northern Ireland: All Tenancy Agreements to be in a written form. There is no equivalent to an Assured Shorthold Tenancy which exists in England. Residential tenancies in Northern Ireland are governed by the Rent Order (NI) 1978 which provides certain basic rights to Tenants of privately rented properties whether or not these rights are expressly included in their Tenancy Agreements.
- Model Tenancy Agreements (MTA) can be used where the landlord wishes to allow a long term tenancy agreement to be put in place; this would generally be used for terms longer than 2 years. Care must be taken to ensure any tenancy agreements do not exceed the term of an Interest Only mortgage where sale of property is chosen as the repayment strategy.
- A single household with one tenancy and one tenancy agreement e.g. individual/couple/family unit/group of students or professionals (no more than 4 tenants under one agreement)
- A Company/Corporate Lets (for a minimum term of 6 months and maximum term of 3 years)
- Leaseback Arrangements to builders (minimum lease term of 6 months and a maximum lease term of 3 years). This is where a customer buys a new home, but leases it back for a period of time to the house builder to be used as a show home (cannot be used as the site’s official sales office – other than where the garage is to be used for such purpose. The developer’s Licence Agreement that the property will be returned to its original state must be evidenced). These letting types are acceptable, but please note that the case will be underwritten on the rental income achieved on an AST basis in the local area as provided by the surveyor and not on the guaranteed rental figure which the builder agrees to pay
- College and/or University Head Tenancy Schemes (minimum term of 6 months and maximum term of 3 years).
- Lease to a registered Housing Association or Local Authority for a (minimum term of lease 6 months and maximum term of 3 years). If the initial term of the lease was 5 years but there is now only 3 years left to run on receipt of the application this will be acceptable.
- Letting to tenants in receipt of housing benefits is acceptable
- If the tenant fails to vacate at the end of the term of the AST/PRT it rolls onto a Statutory Periodic Tenancy. This will occur where neither party wish to change the terms and it will roll on until either party gives notice. The minimum notice period for the landlord is 2 months (as it must be during the term of the AST) and for the tenant 1 month. This is acceptable to Barclays as long as the applicant provides a letter to confirm that the expired AST is still in place, with all terms unchanged.
All of the following are UNACCEPTABLE as either “existing” or “proposed” lease/letting types:
- Letting to a related person* of the applicant (see note below). Therefore, any application submitted with this type of tenant must be declined as a Buy to Let application, and should be treated as a residential regulated mortgage contract.
- Sale and lease back where the tenant is the previous owner of the property
- Letting to directors/shareholders/members of the SPV Limited Company/LLP which is our borrower or any associated SPV or LLP
- Letting to diplomatic tenants and/or embassies
- Direct letting to tenants from the local authority housing waiting list i.e. the tenancy agreement is between our borrower and the tenant, rather than our borrower and the local authority
- Holiday lets
- Regulated and/or sitting tenants
- Premium Leases where all rent is paid in advance at the start of the tenancy
- HMO requiring a licence from the local authority – Refer to HMO requirements
- Room by room letting with multiple tenancy agreements
- Assured Tenancies (Scotland)
- Protected Tenancies (Northern Ireland)
*A related person is defined as “The borrower’s spouse, parents, grandparents, siblings, children and grandchildren. An unmarried partner of the borrower whose relationship with the borrower has the characteristics of the relationship between a husband and wife is also included, which can include a person of the same sex as the borrower. Stepchildren are included”.