LANDLORDS URGED TO RE-MORTGAGE AS TOUGHER BTL LENDING CRITERA BEGIN TO BITE

Landlords are being urged to re-mortgage before tougher buy-to-let lending criteria, due to be introduced in September, make it more difficult to obtain finance.

The call comes as the proportion of buy-to-let re-mortgage transactions, as a share of the total lending market, has risen over the last few months*, and as a diminishing demand for new buy to let loans has driven many lenders to slash mortgage rates. The National Landlords Association (NLA) says the rise in re-mortgages is down to  landlords looking to limit their exposure to the new buy to let tax regime.

The forthcoming tightening of lending criteria is the latest in a series of attempts by the Bank of England’s Prudential Regulation Authority (PRA) to cool the buy-to-let market, following measures introduced earlier this year.

The NLA’s most recent Quarterly Landlord Panel** shows that landlords are already finding it harder to arrange mortgages, with forty three per cent saying the process of obtaining finance has become more difficult since the beginning of the year.

Furthermore, more than half (53 per cent) of landlords report that they have had to provide additional evidence to support recent mortgage applications, including tax returns, cash flow forecasts, and business plans.

With just over a month before the second phase of the PRA’s underwriting standards are due to be implemented (30th September 2017), the NLA is urging any landlords thinking about re-mortgaging not to wait any longer.

Commenting on the findings, Chris Norris, Head of Policy at the National Landlords (NLA), said:

“Since the PRA regulations were introduced in January, the marketplace is looking considerably more complex. It was always likely that lenders would start to demand more evidence from applicants, and landlords are already feeling they have to go further to prove that they can afford finance.

“Changes to buy-to-let taxation will eat away at many landlords’ profits and make it more challenging for them to manage their businesses. As a result, many are looking to limit their exposure to the changes, which is why we’ve seen a rise in re-mortgaging.

“However, the situation is due to worsen from September and while it may not be financially advantageous for everyone, if you’re considering re-mortgaging or expanding your portfolio then do so now to avoid any further difficulties”.

Case Study

Jeff, who has been a landlord for fourteen years and has seven properties in Lincolnshire, says it’s becoming harder to get finance because lenders view him as high risk.

“After the 2008 economic crash, my outstanding debt changed the way lenders viewed me, and now I’m regularly either refused or charged higher rates if I want to take out finance.

“Lending regulations and policy need to be changed in order to incentivise investment in rented housing and return the market to a healthy level. The PRA’s new standards will only make things worse and make it harder for small scale landlords like me who are in a position to provide a valuable source of housing”.

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

Home and Living

The Anatomy of a Perfectly Cozy Reading Nook

The Foundation: Choosing the Right Space Selecting the ideal spot for your reading nook is the cornerstone of its success. Consider a quiet corner bathed in natural light, away from the distractions of modern life. The goal is to create a haven where one can escape into the world of literature without interruptions. Location Matters…
Read More
Breaking News

Breaking Property News – 21/02/24

Daily bite-sized proptech and property news in partnership with Proptech-X.   Government announces new Short-term lets rules to protect communities and keep homes available. Press Release London February 2024 – Overview – ‘Short-term lets rules to protect communities and keep homes available. Local residents will be protected from being pushed out of their communities by excessive short-term…
Read More
Breaking News

Enhancing Security and User Experience with Face Recognition Technology

In an era where digital interactions dominate our daily lives, the need for robust and convenient security measures has never been greater. Traditional methods of authentication, such as passwords and PINs, are increasingly susceptible to breaches and hacks. In response to these challenges, face recognition technology has emerged as a cutting-edge solution, offering a unique…
Read More
Love or Hate Rightmove
Breaking News

Rightmove’s weekly mortgage tracker – 21/02/24

Headlines The average 5-year fixed mortgage rate is now 4.72%, up from 4.62% a year ago The average 2-year fixed mortgage rate is now 5.08%, up from 4.95% a year ago The average 85% LTV 5-year fixed mortgage rate is now 4.67%, down from 4.68% a year ago The average 60% LTV 5-year fixed mortgage rate is now 4.19%, down from 4.23% a year ago The average monthly mortgage payment on…
Read More
Home and Living

Standing Desks Unveiled: Exploring the Health Benefits and Considerations

In recent years, standing desks have gained popularity as a revolutionary solution to combat the negative effects of prolonged sitting. As the modern workforce becomes more health-conscious, the standing desk has emerged as a promising alternative to traditional seated workstations. In this article, we unveil the health benefits and considerations associated with standing desks, providing…
Read More
Home and Living

6 Handy Tips for Maintaining Your Heating System

As the weather gets cooler, having a heating system becomes crucial for a home atmosphere. Besides the quality of your heating system and its installation, regular maintenance is key to keeping it running, lasting longer and using energy wisely. A maintained heating system not only keeps you warm but also helps save energy making your…
Read More