You may or may not be aware of changes made by the Prudential Regulation Authority (PRA) to regulate the Buy to Let mortgage market. Although Buy to Let mortgages are technically not regulated, the guidance given by the PRA is intended to prevent over heating of this very popular property ownership and all lenders regulated by the PRA are expected to follow these new guidelines from 1st January 2017.
This has had a marked impact on the market, resulting in more thorough checks made on the applicants especially in relation to affordability. The results are very significant and have impacted on how much a Buy to Let applicant can borrow. But there still remains a large difference between lenders. As an exact example, if you wanted to take out a buy to let mortgage for £150,000, the rental income required to support this varies from £781 per month up to £997 per month depending on which lender is chosen.
Many potential borrowers will now find that the amount they want to borrow towards a buy to let purchase or re-mortgage is greatly reduced as the property rental value will not support the size of loan required. In many cases this will result in the application failing and a reduction in rental properties coming to the market.
There are also large changes on the way in relation to taxation on income derived from rentals. I am not a taxation adviser and therefore I cannot give any kind of taxation advice, but I strongly recommend that existing buy to owners and those intending to become landlords seek suitably qualified advice on this matter. In relation to this we are experiencing more and more rental properties being purchased in the name of limited companies. This trend is also being supported by more and more buy to let lenders with new and improved offerings.
In summary, the buy to let market is still very popular, but overnight it has become far more complicated. As experienced advisers with access to the whole market we are uniquely positioned to help resolve these matters for experienced and new landlords.
Don’t give up looking for that new product and don’t become disheartened if it seems you have no chance. Westexe Mortgages are here to help you find the best solution to your mortgage needs, whether that is Buy to Let or Residential. Call us 24/7 on 01392 216 344 for prompt professional advice.