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.
Recent posts
Best UK Mortgage Rates this Week
Yesterday
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
Renters' Rights Act
2 days ago
The Renter’s Rights Bill became law at the end of October, which means it has been signed off by the King, and it is now the Renters’ Rights Act. Despite this becoming law, these changes are likely to start changing within the next six months, with the aim of being fully implemented throughout 2026 and into 2027.
Green Mortgages | Rewards and Benefits
2 days ago
Mortgage lenders are starting to recognise their “Green” responsibilities when it comes to the different products they offer.
Costliest Streets in Great Britain
6 days ago
Recent data from Rightmove shows the most expensive streets in Great Britain, with the majority being situated in the capital.
The Bank of England Governor, Andrew Bailey, has advised that, due to the “very big energy shock” the economy is facing, they won’t be in a rush to increase UK interest rates.
Many homeowners don’t realise that a simple act or oversight could invalidate their home insurance policy. Home insurance is essential in protecting your most valuable assets; however, it is important to understand what affects your cover to ensure you are fully protected.
In certain areas, impressive views are one feature that buyers are willing to pay price premiums of more than 30 per cent.
The UK mortgage market is seeing lenders withdraw deals and hike mortgage rates amid the escalation of conflict in Iran. This isn’t great news for borrowers, with the average rate for a two-year fixed deal sitting above 5%.
More information
Trusted by
