Buy-to-let lending set to become more strict across the UK
Landlords in the UK are being warned that now could be the time to remortgage if they want to expand their portfolios, with a reminder that new, stricter lending conditions are set to hit the market next month.
From September, lenders will be forced to follow the Bank of England’s Prudential Regulation Authority (PRA) rules, which will mean they need to be more scrutinising when it comes to deciding whether or not to give someone a buy-to-let mortgage.
It will mean that those who may have been approved for a loan to buy rental homes in the past might face rejection the next time they try to come to market. For that reason, the National Landlords Association (NLA) is saying that now is the time to remortgage.
"It was always likely that lenders would start to demand more evidence from applicants, and landlords are already feeling they have to go further to prove that they can afford finance," said Chris Norris, head of policy at the NLA. He added that the tightening of the rules is the reason the NLA has already recorded a rise in remortgaging.
And despite the rule changes not coming into effect until September, many landlords are reporting that they have already witnessed more scrutiny when they came to try to borrow money for buy-to-let purposes.
As many as 43 per cent said that obtaining finance has become more difficult since the beginning of the year, while another 53 per cent told the NLA that they have already had to provide more evidence to lenders when trying to obtain a mortgage than they have done in the past.
"The situation is due to worsen from September and while it may not be financially advantageous for everyone, if you’re considering remortgaging or expanding your portfolio then do so now to avoid any further difficulties," said Mr Norris.