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Remortgage before new Buy to Let lending rules kick in

Friday 25 August 2017

Landlords who are thinking about remortgaging are advised to act now before stricter Buy to Let lending rules, due to be introduced next month, make it harder to obtain finance.

The proportion of Buy to Let remortgage transactions has risen over the last few months, as landlords look to limit their exposure to the new Buy to Let tax regime, says the National Landlords Association (NLA).

The impending changes lending represent yet another bid by the Bank of England’s Prudential Regulation Authority (PRA) to cool the Buy to Let market and will come into force on September 30. 

Chris Norris, Head of Policy at the National Landlords Association (NLA) said: “Since the Prudential Regulation Authority (PRA) regulations were introduced in January, the marketplace is looking considerably more complex. 

“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. 

“Changes to Buy to Let taxation will eat away at many landlords’ profits and make it more challenging for them to manage their businesses. 

“As a result, many are looking to limit their exposure to the changes, which is why we’ve seen a rise in remortgaging. 

“However, 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.” 

The National Landlords Association’s (NLA) most recent Quarterly Landlord Panel has revealed that 43 per cent surveyed say the process of obtaining finance has become more difficult since the beginning of the year, and 53 per cent  report that they have had to provide additional evidence to support recent mortgage applications, including tax returns, cash flow forecasts, and business plans.

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