New regulations due to be launched in 2017 could make buying a property far more complex for landlords.
The Prudential Regulation Authority, part of the Bank of England, has set out new regulations which will come into effect from 30th September 2017. The new rules will affect landlords who have four or more buy-to-let mortgages. Each time a landlord wants to refinance or buy a new property, they will have to submit their income and mortgage information for each property they own.
Lenders may find that their volume of work increases, which may lead to some lenders not offering mortgages to buy-to-let customers in the future. At the moment, lenders base an application on the value and rental income of the property which the landlord is borrowing against. The new regulations state that the rental income and mortgages of all properties owned by the landlord will have to be reviewed for each new buy-to-let application.
Some lenders already have restrictions in place for landlords, including a maximum number of mortgages or total borrowing. However, a landlord may also have mortgages with other lenders. According to John Charcol, a mortgage broker, a number of lenders will find the new rules uneconomic. He added that although the new rules won’t come into force until September 2017, some lenders will withdraw products before that date.
Landlords who are looking for a new mortgage may want to consult with a mortgage adviser who has completed CeMAP training, so that they can help source a suitable mortgage and make the application process a little easier.