Criteria changes ahead of buy to let tax cuts

Fleet Mortgages announced an update to its criteria this week, with a focus on the transfer of property from individuals to limited companies. The lender has revealed it will now consider applications where individuals, such as buy to let landlords, wish to transfer properties to a limited company, as long as the purchase falls within standard purchase criteria.

This has been applied to the lender’s entire range of existing limited company products available for transfer/purchase, including a lifetime tracker product available at a rate of 4.19% up to 75% loan to value (LTV), for a 1.5% fee.

Entering the market ahead of the April 2017 tax changes, where the tax relief currently available on personal buy to let mortgages will be cut from 45% to 20%, Fleet Mortgages criteria changes are timely to the expected actions of many buy to let landlords.

As the anticipated tax changes do not apply to company buy to lets, many are likely to transfer property to limited companies now and join corporate vehicles in order to secure their existing portfolio or purchase new properties within.

Fleet Mortgages is not the only lender to have showed signs of preparation for these tax changes, however, with Newcastle Building Society becoming the latest lender to have upped its rental coverage requirements. The lender has now increased its ratio to 145% on a reference rate of 5.5%, from a previous 125% on a reference rate of 5%. This follows the same action from the likes of Barclays, Foundation Home Loans and The Mortgage Works, who have all raised their rental cover expectations to 145% over the past few weeks.

Despite this, the market remains largely positive for non-standard borrowers, as many lenders continue to loosen previously stringent criteria for many customers with more complex financial needs. Watch this space for the latest updates and criteria changes from lenders, as they happen.

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