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Recent attempts by the Prudential Regulation Authority to stifle the buy to let market have led to landlords finding it harder to obtain a buy to let mortgage deal.
63 per cent of the landlords aware of the recent changes have claimed that it is now harder to obtain a buy to let mortgage deal. Regulatory changes by the Prudential Regulation Authority have led to more stringent stress tests introduced in January 2017, whilst affordability tests for portfolio landlords were made stricter last September.
The research came from a recent survey by the National Landlords Association, which found that 70 per cent of all portfolio landlords, or those with four or more buy to let mortgages, are facing greater difficulty obtaining finance. This is likely due to the fact that lenders are now required to take into account how all of a landlords’ properties are performing financially when they offer a new mortgage deal.
However, it is not only portfolio landlords affected. 48 per cent of all landlords aware of the changes believe it has slowed down the finance process. Additionally, 46 per cent believe that the changes have reduced the available range of mortgage products.
CEO of the NLA, Richard Lambert, spoke out about how the changes are affecting the sector: ‘These findings show that the PRA’s changes seem to be greatly affecting the ability of landlords to find new finance and increase their portfolios. Given that the private rented sector now makes up 20 per cent 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.’
However, additional research from Money Facts found that there are now 2,052 buy to let mortgage products on the market. This is up from the 1,725 buy to let mortgage products available in September. They suggest that although the process of obtaining a new mortgage might be more complex, the availability remains.
Richard concluded: ‘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.’