The Buy to Let (BTL) property market has been a consistent talking point in recent years, following a string of government policies which have impacted tenants and landlords. Most recently, the Prudential Regulation Authority’s (PRA) restrictions on lending criteria for BTL mortgages have meant the amount landlords earn in rent must cover at least 125% of their mortgage interest costs, at a stress test of 5.5%.
As stated in a recent article in The Financial Times, BTL landlords are likely to face a challenge when it comes to remortgaging as a direct result of these affordability and tax changes. Those who took on a mortgage prior to the increased regulation may not be able to remortgage on the same attractive terms. However, we are seeing lenders respond to this by amending products by reducing interest rates, raising the maximum amount they’ll lend and fixing their rates over a longer-term.
As our Managing Director, Hugh Wade-Jones, was quoted in the same article saying, variable rates are likely to be the most forgiving at the moment, but they will be the first to feel the pinch of interest rates when they go up. Overall, people need to be more realistic about their borrowing and we ought to see more regulation in the market— for too long, buy to let has been unregulated.
Landlords will suffer a further blow in April when the rate relief on higher mortgage interest payments are phased out, removing this particular inventive for buy to let investors. As the article also discusses, these changes could well see the departure of amateur landlords from the market. Particularly those who aren’t aware of the attractive products still available to them.
Our team is extremely well-versed in the buy to let mortgage market and can provide impartial guidance on how to maximise your BTL property portfolio. To speak to someone about your investment plans, or your plans to remortgage, our brokers would be happy to talk you through the most beneficial options to suit your requirements.