Buy-to-let borrowing shake up

Buy-to-let borrowing shake up causes more heartache for landlords

The Chancellor announced further heartache for any landlords who were hoping to continue investing in property, against all odds, with an announcement that they looking to give the Bank of England further powers over the regulations of buy-to-let mortgages.

The regulations are set to include the power to require regulated lenders to place limits on buy-to-let mortgage lending by reference to loan-to-value ratios and interest coverage ratios. The powers would be similar to those that the Band of England already has over the residential lending market, which were granted in April 2015.

The consultation is designed to hand the authorities the tools it needs to enhance financial stability in Britain, but this latest move could end up being a death knell for many hopeful landlords who were looking to invest before property prices shot up to an unmanageable high.

According to a report from the NAEA, it is predicted that property prices are set to double in the next decade, with the average property reaching £419,000. Combined with April’s 3% Stamp Duty surcharge and tax relief cuts
The amount of tax relief they can claim is to be cut, with a change to landlords being taxed on turnover and not profits – the combination of factors has led to The Council of Mortgage Lenders predicted the number of new buy-to-let mortgages dropping by 22% over the next two years.

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