Nottingham Building Society Eases Mortgage Rules to Help Landlords Sell to Sitting Tenants

Summary: Nottingham Building Society has revised its mortgage lending criteria to facilitate landlords selling properties directly to their sitting tenants, including discounted sales. This change supports landlords exiting the private rented sector and tenants seeking to purchase their homes, particularly ex-local authority flats.

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New Mortgage Criteria Support Landlord-to-Tenant Sales

Nottingham Building Society has introduced new lending rules that allow landlords to sell their properties directly to the sitting tenants at a discounted price, where the discount forms part of the transaction. This concessionary purchase policy reflects a growing trend among landlords exiting the private rented sector, especially when tenants wish to remain in their homes by buying them.

Matt Kingston, Sales Director at Nottingham Building Society, explained the rationale behind the changes: “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’.”

Expanded Lending on Ex-Local Authority Flats

Alongside the concessionary purchase policy, Nottingham Building Society will now lend on ex-local authority flats, which are homes previously owned or managed as social housing but now operating within the private market. This sector is estimated to include around one million properties across the UK.

The Society will offer loans up to 85% loan-to-value on these flats, applicable to both residential and buy-to-let borrowing. This opens up opportunities for first-time buyers purchasing former council flats, as well as landlords acquiring similar properties.

Additional Lending Criteria Updates

The Society has also updated its policies regarding deposit sources. Housebuilder gifted deposits will now be accepted on new-build homes, provided the borrower contributes some of their own funds alongside the gift. Additionally, repayments of director’s loans can be used as part of the deposit when a company repays money owed to a self-employed borrower, subject to full evidence of the repayment.

These changes enable business owners to use funds owed to them by their companies as part of their property deposit, broadening access to finance.

Earlier adjustments to Nottingham Building Society’s lending criteria have expanded acceptable income types across various mortgage ranges, including residential, foreign national, returning expat, and retirement interest-only products. Recognised income streams now include agency and zero-hours work, certain state benefits, and drawdown pensions.

What This Means for UK Landlords

For landlords considering selling properties, particularly those with sitting tenants, Nottingham Building Society’s updated mortgage criteria offer a streamlined route to facilitate discounted sales. This can be especially beneficial when tenants wish to purchase their homes, potentially reducing void periods and sales complexities.

The inclusion of ex-local authority flats in lending policies also widens the scope for landlords to acquire or sell such properties within the private market, reflecting the significant presence of these homes in the UK housing stock.

Moreover, the acceptance of alternative deposit sources and broader income recognition supports a wider range of buyers, including self-employed individuals and those with non-traditional income, which may help landlords find suitable purchasers more easily.

Suggested internal link anchors

• landlord mortgage lending UK
• selling property to tenants
• ex-local authority flats
• buy-to-let borrowing
• concessionary purchase policy
• self-employed mortgage criteria
• housebuilder gifted deposits
• director’s loan deposit
• private rented sector exit
• first-time buyer mortgages

TLA update

TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. We are inviting legal, trades, insurance, financial, mortgage, tenant screening, and other service providers to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/