A new survey by a leading lettings trade body suggests that the Bank of England’s attempts to make buy to let mortgages harder to get have indeed worked.
The changes, which come from Bank’s Prudential Regulatory Authority, were introduced in two stages last year.
The first stage required lenders to apply stress tests to all mortgages, with monthly rental income typically needing to cover 125 percent of mortgage repayments. The second stage required landlords with four or more buy to let mortgages to undergo specialist underwriting processes when making a new application.
According to the National Landlords Association’s latest research, 63 per cent of landlords aware of the changes believe it makes obtaining new buy to let mortgages more difficult. This increases to 70 percent for portfolio landlords - those with four or more buy to let properties already.
Some 48 per cent of landlords aware of the changes believe they have slowed down the finance process and 46 per cent believe the changes reduce the range of mortgage products available.
“Given that the private rented sector now makes up 20 percent of the housing market, it is vital that professional landlords are incentivised to continue providing good quality affordable housing to those who need it. This appears to be achieving quite the reverse” warns Richard Lambert, chief executive of the NLA.
“Landlords looking to add new properties to their portfolios need to be conscious of the new requirements. We suggest talking to your mortgage broker or bank before committing to any new property.”