Tougher buy to let lending rules for landlords

September 30, 2016
bank of england interest rate

The Prudential Regulation Authority (PRA),  the supervisory arm of the Bank of England, has confirmed it will bring in tougher underwriting standards for buy-to-let lenders following an earlier consultation.

Tougher lending restrictions are to be imposed on Landlords when applying for buy to let mortgages, the new rules will require banks and mortgage providers to apply rigorous “affordability assessments” on such borrowers.

The paper  suggests lenders should consider future interest rate rises for at least the first five years of any buy-to-let mortgage,  the PRA confirmed a 5.5 per cent interest rate figure would apply.

The Prudential Regulation Authority will require lenders to start bringing in interest cover ratio changes by 1 January 2017, and to start the implementation of the remaining changes by 30 September 2017.

To read the response from the regulator to the CP11/16 consultation and final rules click here.

 

 

Allen Walkey

Highly experienced businessman with a successful career in property sales and investment both in the UK and abroad. Now a freelance writer and blogger for the property and Investment Industry, keeping readers up-to-date with changes and events in a rapidly changing world.

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