Bank of England’s buy to let changes make it harder to get a mortgage say landlords

Six months after the Bank of England’s (BoE) latest attempt to cool the buy to let market, almost two thirds of landlords (63 per cent) who are aware of the changes say it is now harder to get a mortgage.

The changes, which come from BoE’s Prudential Regulatory Authority (PRA), were introduced in two stages last year. The first stage in January 2017 required lenders to apply an interest cover ratio (ICR) of 5.5 percent to all products with terms of less than five years. More stringent stress tests were also introduced for all buy-to-let mortgages, with monthly rental income typically needing to cover 125 percent of mortgage repayments.

The second stage, introduced in September 2017, requires portfolio landlords, i.e. those with four or more buy to let mortgages, to undergo specialist underwriting processes when seeking new buy-to-let mortgages. This includes additional affordability tests with providing supporting documentation such as business plans. It also means that underwriters must look at the landlord’s entire portfolio when considering new applications, not just the property needing to be financed.

According to the National Landlords Association’s (NLA) latest research, 63 percent of landlords aware of the changes believe it makes obtaining new buy-to-let mortgages more difficult. This increases to 70 percent for portfolio landlords, i.e. those with four or more buy-to-let mortgages.

Similarly, almost half (48 percent) of landlords aware of the changes believe it has slowed down the finance process and 46 percent believe the changes reduce the range of mortgage products available.

Richard Lambert, CEO of the NLA said:

“These findings show that the PRA’s changes seem to be greatly affecting the ability of landlords to find new finance and increase their portfolios. Given that the private rented sector now makes up 20 percent of the housing market, it is vital that professional landlords are incentivised to continue providing good quality affordable housing to those who need it. This appears to be achieving quite the reverse.”

“Landlords looking to add new properties to their portfolios need to be conscious of the new requirements. We suggest talking to your mortgage broker or bank before committing to any new property.”

Shared by: press@landlords.org.uk

EAN Content

Content shared by this account is either news shared free by third parties or sponsored (paid for) content from third parties. Please be advised that links to third party websites are not endorsed by Estate Agent Networking - Please do your own research before committing to any third party business promoted on our website.

You May Also Enjoy

Breaking News

Spring activity boost pushes asking prices close to new record

The average asking price of property coming to the market rises by 1.1% (+£4,207) this month to £372,324, just £570 short of the record in May 2023, while the annual rate of price growth is now +1.7%, the highest level for 12 months: A key factor behind this growth towards a near-record average price is…
Read More
Breaking News

Weekly News Roundup – 19/04/24

A roundup of the week’s top property and proptech news stories in partnership with Proptech-X Table of Contents Ascendix deep dives into the world of the AVM CEO Adam Pigott on tour in Norfolk with tlyfe App VTS Activate Multifamily launches   Ascendix deep dives into the world of the AVM This month Yana Yarotska from Ascendix…
Read More
Breaking News

Breaking Property News – 18/04/24

Daily bite-sized proptech and property news in partnership with Proptech-X.   Scotland to get to Net Zero by 2045 in stunning U-turn Because of its serious implications here in full is the Scottish ‘apology or explanation’ why it thinks it is OK to let the planet burn for the next two decades. Net Zero and…
Read More
Breaking News

Breaking Property News – 17/04/24

Daily bite-sized proptech and property news in partnership with Proptech-X.   CEO Adam Pigott on tour in Norfolk with tlyfe App Full disclosure CEO Adam Pigott and his team are one of my earliest clients, so it is always a pleasure to hear what they have been getting up to. And this week they were…
Read More
Love or Hate Rightmove
Breaking News

Rightmove’s weekly mortgage tracker

Headlines The average 5-year fixed mortgage rate is now 4.84%, up from 4.45% a year ago The average 2-year fixed mortgage rate is now 5.23%, up from 4.77% a year ago The average 85% LTV 5-year fixed mortgage rate is now 4.77%, up from 4.46% a year ago The average 60% LTV 5-year fixed mortgage…
Read More
Rightmove logo
Breaking News

Rightmove comment on inflation reducing to 3.2%

UK inflation slowed less than expected last month, making traders and economists more cautious about the likely pace of interest rate cuts. Matt Smith, Rightmove’s mortgage expert said: ‘It’s positive to see inflation continuing to fall this morning, albeit not by quite as much as expected, as the blocks continue to build towards the anticipated…
Read More