The Prudential Regulation Authority's recent attempts to cool the buy-to-let market appear to have been successful, as 63% of landlords who are aware of the changes that occurred six months and a year ago say it's now harder to get a new buy-to-let mortgage deal.
This follows regulatory changes which saw more stringent stress tests introduced in January 2017 and affordability tests for portfolio landlords made stricter last September, among other things. That's according to the National Landlords Association's latest survey, which further found that 70% of portfolio landlords (i.e. those with four or more buy-to-let mortgages) are facing greater difficulties.
Considering that lenders now have to take into account how all of a landlord's properties are doing financially when deciding on a new mortgage deal, it's hardly surprising that portfolio landlords are feeling the impact. Yet almost half (48%) of all landlords aware of the changes believe it has slowed down the finance process, while 46% believe the changes have reduced the range of mortgage products available.
"These findings show that the PRA's changes seem to be greatly affecting the ability of landlords to find new finance and increase their portfolios," said Richard Lambert, CEO of the NLA. "Given that the private rented sector now makes up 20% of the housing market, it is vital that professional landlords are incentivised to continue providing good quality affordable housing to those who need it. This appears to be achieving quite the reverse."
That said, our own figures show that compared to the 1,725 buy-to-let products available at the start of September, there are now 2,052, so while landlords may feel there are less products to choose from, the opposite is true. The process may be a bit more arduous than it used to be, but you can still find a top buy-to-let deal.
Richard concludes: "Landlords looking to add new properties to their portfolios need to be conscious of the new requirements. We suggest talking to your mortgage broker or bank before committing to any new property."
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