The buy to let market risks becoming a car crash following the changes of lending rules for so-called portfolio landlords with four or more investment properties.
That is the forecast of Mortgages for Business chief executive David Whittaker.
Mortgage Strategy reports that Whittaker told a financial services seminar in London that a combination of lack of knowledge among those in the private rental sector and an absence of lender information would result in a host of issues from October 1.
That is the date when new rules, initiated by the Bank of England’s Prudential Regulation Authority, come into effect.
“It’s going to be a car crash. Landlords don’t know about it and they’re going to say to advisers, ‘I don’t like what you’re asking me to supply and I’ll go somewhere else’. Four days later they’ll come back to you the adviser and admit you were right” Whittaker is reported to have told delegates.
“It’s a bit late in the day for lenders to be saying we’ll announce shortly,” he said. “I wish advisers all the best of luck on October 2 because there’s going to be a lot of white noise around the market.”
In recent weeks several lenders have set out their new criteria to meet the tighter regulations, which take into account a much wider range of personal and financial information about the borrower when reaching a decision about future mortgage lending.