Wednesday August 9, 2017
What mortgage brokers need to know
The UK’s buy to let property market has been in a state of upheaval for some time now starting with the extra 3% Stamp Duty levied on the purchase of additional properties introduced in April 2016 and now the changes to the way in which landlords’ income is to be taxed. Tougher affordability rules were introduced in January this year.
By the end of September 2017, lenders offering finance to landlords with four or more properties (portfolio landlords) will need to undergo a more rigorous underwriting process including checking out the viability of other loans within their portfolio.
What your clients need to know
As of 1st January lenders also need to take into account borrowers’ costs including tax liabilities, verified personal income and any possible future interest rate rises. From September they will also take into account the borrowers’ experience in the market, their full portfolio of properties and outstanding mortgages, the assets and liabilities of the borrower and the merits of any new lending. As the tax changes will reduce many landlords’ income, most lenders have now moved towards rental income cover of 145%.
There is no doubt that these changes will shake up the market and lead to concern and confusion for some landlords which is why seeking the opinion of an expert is always advisable. If you have any concerns please give us a call – we would be pleased to help advise you.