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Britain’s two million landlords have had to swallow a lot in recent years.
Higher taxes for landlords will be phased in from April 2017, while the extra 3% stamp duty surcharge (introduced in April 2016) on second homes and the abolition of the wear and tear allowance have left many landlords reeling. But now, another threat to their property investments looms: the intervention of the Bank of England, or more specifically, the Financial Policy Committee (FPC).
The FPC is to be given greater powers over the buy-to-let sector from early 2017.
So what will these new buy-to-let lending powers mean?
These new powers will allow the FPC to regulate how buy-to-let mortgages are obtained. The FPC will be able to restrict loan-to-value ratios. In other words, landlords will have to raise a higher deposit if they are to purchase a property. This will effect landlords who are looking for new loans or to remortgage.
But why?
These powers are designed to protect the financial system from risk by ensuring the buy-to-let mortgage market remains stable. The FPC will be able to step in and dictate how much landlords can borrow if they have concerns about market stability.
The Bank of England has previously warned about the impact of buy-to-let lending on the stability of the economy. There was a general feeling the lending rules should be stricter in order to ease house price increases.
The tax and regulation changes imposed on the buy-to-let sector in recent years is mainly a result of public concern that first-time buyers are being priced out of the property market.
More rules are coming
More restrictions are on the way for landlords with four or more properties with buy-to-let mortgages on them. If they have four or more properties, landlords will have to provide details of their entire portfolio and of the mortgage on each property every time they wish to buy an additional property. This may reduce the likelihood of being offered a loan.
Many have moved away from the pensions system and towards the buy-to-let market as a safer alternative for investment. But the Bank of England’s new buy-to-let lending powers could make it even harder to take out a mortgage.
Landlords will do well to seek the help and guidance of an experienced letting agent to steer them through the changes.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Are you struggling to make sense of the buy-to-let market and your position, as a landlord, within it?[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_btn title=”Get in touch with us today” style=”outline” shape=”square” color=”black” size=”lg” align=”center” button_block=”true” link=”url:http%3A%2F%2Fwww.tempandrewreeves-co-uk.stackstaging.com%2Fcontact-us|||”][/vc_column][/vc_row]
