As from 30 September 2017 lenders apply new rules to assess buy-to-let mortgage applications from landlords who own four or more mortgaged properties.
Landlords who seek finance will now have their entire property portfolio assessed, as opposed to just the individual property subject to the mortgage application.
Portfolio landlords will face increased paperwork which will need to include a schedule showing all their properties and a summary of their experience as a landlord in addition to a statement of assets and liabilities including all outstanding mortgage balances. As lender requirements will change it is anticipated that there will be a decreased number of lenders offering mortgages with costs increasing for landlords as a result.
The further squeeze on landlords may convince a number to sell some or all of their properties. Bury & Walkers LLP specialise in auction sales and possession claims to assist in this process.
Previously, landlords were able to show that their overall rental profits met the interest cover threshold for their total mortgage payments. Now, each individual property will need to meet the bank’s minimum ratio. We don’t yet know how each buy-to-let lender will adapt their rules to reflect the new regulations, but a few have already announced their plans in relation to rental income.