What do changes to the buy-to-let landscape mean for landlords in Bromley & Beckenham?
In September buy-to-let landlords in Bromley & Beckenham as well as the wider South East London area will again be expecting to feel the pinch. The government has announced that it will double down on its crackdown on buy-to-let investors.
From two months’ time tougher standards will be placed on Landlords with four or more properties mortgaged. Portfolio landlords may find it harder to obtain an additional new mortgage.
The changes come from the Prudential Regulation Authority (part of the Bank of England).
What are the implications?
This means lenders will have to consider a Bromley & Beckenham landlord’s full portfolio before deciding what kind of mortgage they can provide on a single property. This is the first time this has kind of regulation will be enforced.
One implication is that lenders may require proof of rental income, a business plan and ‘stress test’ before mortgage approvals.
Some buy-to-let brokers have restrictions in place already for those landlords who exceed certain limits – between three or four or exceeding £1-2m in value.
However, nowadays it is rare brokers to consider whether landlords have buy-to-let mortgages taken out with a different lender.
Are the concerns of landlords in Bromley & Beckenham justified?
Many Mortgage Brokers worry that landlords in Bromley & Beckenham will decide they can no longer continue to operate.
It will also means that the amount of work lenders have to do increases dramatically. Experts have also warned lenders could stop lending to these landlords at all.
If this happens it will be because the increased underwriting will add costs to brokers work. Subsequently landlords will be hit with higher costs as well, making mortgages more expensive for landlords with larger portfolios.
Another implication is that there will be few options available to these landlords over the coming 12 months or more.
Lenders are also worried that this will affect the overall property market. In fact, borrowers are being urged to set up new deals they can before the new rules come into effect on September 30.