If you are a buy to let investor, you might be forgiven for feeling just a little bit picked on recently. What with the increases in SDLT (Stamp Duty Land Tax) aimed squarely at you and the upcoming removal of mortgage interest tax relief, the ‘cons’ are starting to outweigh the ‘pros’ for many investors looking for a home for their money, especially highly geared, high rate tax paying Landlords outside London’s ‘magic circle'.
It is therefore worth sparing a thought for those poor souls yet to enter the sector as the Bank of England has recently announced plans to make mortgage providers impose stricter guidelines on borrowers in the buy to let market.
The Bank of England’s Prudential Lending Authority (PLA) has suggested that the buy to let mortgage sector is set to grow still further despite recent attempts to cool the market. It has therefore requested that lenders now stress test buy to let loan applications assuming a five year increase in interest rates to 5.5%. Many were already doing so, but at less than 5.47%.
These steps, if approved by the Bank of England in June, are expected to further reduce the number of buy to let loans granted every year, perhaps by as much as 20%. The Chancellor strongly denies that there is any collaboration between the Treasury and the ‘independent’ Bank of England in this matter, although he admits it is no coincidence that such measures are being considered on the heels of Stamp Duty increases and changes to mortgage interest tax relief.
It seems clear that the government and its fiscal power is being brought to play to dampen down what is perceived by them to be an overheating residential property market. Other restrictions being suggested include: limiting the percentage of buy-to-let mortgages for each lender, tightening the terms of such mortgages or forcing lenders to use more capital for the loans.
On the up-side, property still remains the best investment in the UK, over the past 5, 10 and 20 years, outstripping gold, stocks and shares and other investments, so it is no surprise that many landlords are swallowing the changes and continuing to invest!
For more information or to speak to a mortgage advisor, contact us on 01628 507477.
Yesterday
The most wonderful time of the year can easily turn into the most expensive time of the year. Watching the pennies doesn’t mean that the Christmas festivities have to stop, following a few budgeting tips can mean you still have a special Christmas and don’t go into the new year in debt.
5 days ago
December is usually a less desirable time to buy as many people don’t want to move over the holidays. However, prospective buyers do start to look at this time. Selling your home in winter may require a bit of extra attention to showcase your property at its best.
We look at why mortgage rates increased following the Bank of England's choice to reduce the bank rate, and should you fix now?
30 Oct 2024
On 30th October 2024 the Chancellor, Rachel Reeves delivered the Autumn budget which we had previously been warned would be “difficult”. Below we have summarised the main housing points.
23 Oct 2024
In an increasingly cashless society, money is an intangible concept for children to grasp. In the days of coins and notes, kids could see money as something physical you require to purchase goods and services.
In order to help teach your children about money, we have listed some tips below;
18 Oct 2024
The UK’s chancellor, Rachel Reeves will deliver the Labour government’s autumn budget at the end of the month, we take a look at what could be announced in relation to housing.
Recent research from Halifax has revealed the most sought-after locations for first time buyers in Britain.
The data which was taken from the Halifax House Price Index looked at areas outside of London where those looking to purchase their first property were buying. Despite high property prices and increased rates, these first time buyer hotspots have remained popular.
7 Oct 2024
Taking care of your mental health means looking after your emotional, psychological, and social wellbeing. There are several ways we can practice self-care that will help to improve our physical and mental health. This can help to reduce our risk of illness, manage stress, and boost our energy levels!