Landlords Encouraged to Remortgage Ahead of New Lending Criteria

Landlords have been urged to remortgage ahead of the introduction of new buy to let lending criteria.

The National Landlords Association (NLA) is calling for landlords to remortgage their properties as the onset of the new criteria, due in September, draws closer. The changes are the latest in a set of measures undertaken by the Bank of England’s Prudential Regulation Authority to stifle activity in the buy to let market.

The proportion of buy to let remortgage transactions has in fact been on the rise in recent months, whilst a decline in demand for new buy to let loans has pushed several lenders to slash their mortgage rates. According to the NLA, the rise in remortgaging can be attributed to landlords attempting to limit their exposure to the new buy to let tax system.

This is supported by the fact that the NLA’s most recent Quarterly Landlord Panel found that landlords are already finding it harder to arrange mortgages. 43 per cent confirmed that the process of obtaining finance has become more troublesome since the beginning of the year.

Additionally, 53 per cent of landlords claim to have had to provide additional evidence to support their recent mortgage applications. This could take the form of tax returns, cash flow forecasts, or even business plans.

Head of Policy at the National Landlords, Chris Norris, said: ‘Since the PRA regulations were introduced in January, the marketplace is looking considerably more complex. It was always likely that lenders would start to demand more evidence from applicants, and landlords are already feeling they have to go further to prove that they can afford finance. Changes to buy-to-let taxation will eat away at many landlords’ profits and make it more challenging for them to manage their businesses. As a result, many are looking to limit their exposure to the changes, which is why we’ve seen a rise in re-mortgaging. However, the situation is due to worsen from September and while it may not be financially advantageous for everyone, if you’re considering re-mortgaging or expanding your portfolio then do so now to avoid any further difficulties.’

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