Bank of England changes to lending criteria that came into force in 2017 were intended to cool the buy to let market. Landlords have been affected by these changes, but lenders want to help landlords.
According to the National Landlords Association, 63% of landlords believe that
obtaining new buy to let commercial mortgages is more difficult. Portfolio landlords that own many properties are more concerned about new mortgage applications. Around 70% of them feared that they would find it more difficult to obtain a new mortgage. Almost half of landlords (48%) think that the changes have made the mortgage application process slower.
Lenders have responded in several ways. Some have cut their interest rates to save landlords money. They have reduced rates on both variable and fixed rate mortgages.
Portfolio landlords with four or more mortgage properties are subject to stricter affordability tests when applying for mortgages. This has meant that many lenders are requiring rents to cover between 125% and 145% of the value of the mortgage payments. Some lenders are relaxing this by also considering a landlord’s other income when calculating if the landlords can afford the mortgage repayments.
The National Landlords Associations wants lenders to do more to help landlords grow their portfolios. Richard Lambert of the National Landlord’s Association said:
“Given that the private rented sector now makes up 20% of the housing market, it is vital that professional landlords are incentivized to continue providing good quality, affordable housing to those who need it.”