34% increase in lenders adapting their lending policies to suit construction subcontractors

Sub-contractors being paid via the CIS Scheme get treated like they are employees with some lenders. It's the best kept secret of the mortgage market. Sub-contractors and contractors effectively get the best of both worlds. They can use their gross pay and, with Halifax, they only need to prove three months' income using their CIS slips. The major benefits mean they don’t need to have been self-employed for a minimum of one year or show 2 or 3 years of accounts to get a mortgage. Since the main contractor deducts 20% tax at the source, select lenders such as Halifax and NatWest treat you like an employee and allow you to use your CIS statements like payslips. As the lender doesn't ask for the company accounts for income proof like true self-employed people, this means you can benefit from all the self-employed tax benefits with expenses, etc, and still be able to get a mortgage like an employed person. Lenders also allow them to use their gross day rate calculated over 46 or 48 weeks.

If you're a subby working through C.I.S. you may well find you have a surprising amount of options at mortgage time using your statements more or less like a payslip as proof of income. Of the high street lenders, Halifax seemed to have led the way historically on this and had some competitive rates over the last few months but it's always a good idea to speak to a broker to check you fit a lender's specific criteria and are getting the best deal for your specific circumstances.

These are exciting times for construction subcontractors and CIS workers. It's great to see lenders recognising the unique financial circumstances of these hardworking individuals. With more lenders considering self-assessment tax returns and employment history for affordability assessments, mortgage options have improved significantly in the past year. As for the most subcontractor-friendly lenders, there's a growing list making strides in this space, offering tailored solutions to meet their needs. And the role of a broker? Absolutely crucial. Navigating the complexities of mortgage options can be daunting, but with a knowledgeable broker by their side, subcontractors can secure the best deals and smooth out the process.

Construction subcontractor mortgages can offer significant advantages for people within the construction industry scheme, particularly with lenders who categorise them as employed rather than self-employed. This distinction can greatly enhance affordability, as lenders typically accept the contractor's payslips provided tax is deducted. In many cases, lenders classifying contractors as employed can result in substantially higher borrowing levels for customers. Notably, lenders such as Halifax, Natwest, Skipton, Gen H, Saffron and Kensington are among those that may consider contractors as employed, opening up avenues for accessible mortgage options.

Subcontracting through the construction industry scheme used to be quite a niche area to advise upon with limited choice of lenders in this space. However with more and more focus on trades and more of the younger generation working via these schemes there has been a huge increase in lending to first-time buyers at higher loan to values. Historically, these cases always found their way to Halifax who would treat these clients as employed and work off of payslips. But the secret now seems to be out, with a plethora of lenders relaxing their criteria in the past 6 months for construction workers and no longer insisting on tax calculations and tax year overviews.