Stricter Buy To Let Lending Rules

The tightening of rules around buy-to-let mortgages continues as stringent rules applying to private landlords come into force as of September 2017

As announced by the Bank of England in September 2016, buy to let mortgage lenders (that are regulated by the Prudential Regulation Authority) have already implemented stricter affordability tests including, interest cover ratio including the impact of recent tax changes and a stress test on interest rate rises.

In addition, the Prudential Regulation Authority has made a proposal to impose additional rules on private landlords/buy-to-let investors, which will be implemented as of 30 September 2017.

The new rules mean that lenders will be forced to apply stringent rules against applications for buy-to-let mortgages, by private landlords, with four or more mortgaged properties.

  1. Lenders may be forced to review a landlord’s entire portfolio, when offering a mortgage on a single property.
  2. Lenders may require proof of rental income and a business plan to support a new application.
  3. Landlord borrowers could find the amount they can borrow will be restricted, if they fail a “stress test” across their portfolio.



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