A number of updates from a UK mortgage lender are expected to make it easier for landlords to sell properties directly to their tenants, while also opening up more opportunities for buyers interested in former social housing flats.
Nottingham Building Society has introduced several changes to its lending criteria, designed to reflect the realities of today’s property market. The adjustments aim to support a wider range of borrowers, including landlords, tenants, self-employed applicants and buyers of ex-local authority homes.
Lending on Ex-Local Authority Flats
One of the key changes is the society’s decision to lend on flats that were previously owned or managed as social housing but are now part of the private market.
This type of housing makes up a significant portion of the UK’s overall housing stock. It is estimated that around one million such properties exist across the country. However, lending on these homes has historically been inconsistent, with some lenders reluctant to provide mortgages for them.
Under the updated rules, Nottingham Building Society will now offer mortgages on these flats with loan-to-value (LTV) ratios of up to 85%. The lending will be available for both residential buyers and those purchasing properties as buy-to-let investments.
Helping Landlords Sell to Tenants
Another major change is the acceptance of concessionary purchases. This allows landlords to sell a property to their existing tenants at a discounted price compared with the market value.
Concessionary purchases can make it easier for tenants to move into homeownership, particularly when the discount effectively forms part of the deposit required for the mortgage. By recognising this arrangement, the lender aims to support smoother transactions between landlords and long-term tenants.
Support for New-Build Buyers
The updated criteria also provide greater flexibility for buyers purchasing newly built homes. Nottingham Building Society will now accept gifted deposits from housebuilders, provided the borrower contributes some of their own funds alongside the gift.
This approach is intended to help buyers who may otherwise struggle to meet deposit requirements, while still ensuring borrowers demonstrate their own financial commitment to the purchase.
Greater Flexibility for Self-Employed Borrowers
Self-employed applicants will also benefit from the new lending rules. In some cases, borrowers will now be able to use the repayment of a director’s loan as a source of deposit, provided the repayment can be clearly evidenced.
This change recognises that many self-employed individuals structure their finances differently from traditional salaried employees, and may access funds through legitimate business-related channels.
Reflecting Today’s Property Market
Matt Kingston, sales director at Nottingham Building Society, said the changes were introduced to better reflect the current realities of the housing market.
He noted that ex-local authority flats represent a large share of UK housing but are often underserved by mortgage providers. At the same time, more landlords are choosing to sell their properties directly to tenants, creating new pathways to homeownership.
Kingston also highlighted that self-employed borrowers are increasingly relying on legitimate capital flows for deposits, while housebuilder support can play a key role in enabling new-build purchases.
According to him, these scenarios are becoming increasingly common rather than niche situations. As a result, lenders need to adapt their criteria to better support the evolving needs of borrowers.
A Shift Towards More Flexible Lending
By introducing these updates, Nottingham Building Society aims to provide a more practical and flexible approach to mortgage lending. The changes could make it easier for tenants to purchase the homes they currently rent, while also expanding options for buyers interested in former social housing properties.
As the property market continues to evolve, lenders are increasingly adjusting their policies to accommodate a broader range of financial situations and housing types. These changes highlight how mortgage providers are adapting to support both landlords and aspiring homeowners in a changing housing landscape.
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