By Louise Misiewicz
Part of the weekly review of the property industry I have with my team of property tax specialists at Optimise Accountants is to look at the state of buy-to-let mortgages, and the impact on property landlords.
As we head into 2017, it’s become clear that the Government and mortgage lenders are going to introduce changes which will impact buy-to-let landlords across the country.
Tough times for property landlords ahead?
Some of these have been felt recently, including Stamp Duty changes, which we blogged about here.
Another significant change for buy-to-let landlords in the UK during 2017 will be the impact of Brexit. We wrote about this here.
How are buy-to-let mortgages changing in 2017?
Industry news outlets are already discussing legislation changes due to impact property landlords in 2017 around the buy-to-let mortgage market.
Property landlords typically take out two-year buy-to-let mortgage deals because they are, on average, the cheapest available. New buy-to-let mortgage rules, however, due for implementation in 2017 mean that buy-to-let mortgage could cost property investors more in 2017.
Additionally, new buy-to-let mortgage rules due for implementation in 2017 mean that many property landlords could be pushed into five-year buy-to-let mortgage deals.
Changes to short-term buy-to-let mortgages
Industry regulators are increasingly concerned that property investors are taking on too much short-term debt and might be unable to deal with the projected interest rate rises when the mortgage interest relief cap legislation changes come into effect in April, 2017.
Banks and mortgage brokers are looking to push property landlords towards five-year buy-to-let mortgage deals, to protect their investments, as well as introducing tougher checks on borrowers looking to invest in short-term buy-to-let mortgages.
What can property investors expect to see happen?
From January 2017, the tougher lending regime (which will be referred to as ‘stress tests’ within the property lending sector) is an attempt by the Prudential Regulation Authority watchdog to reduce risky lending in the buy-to-let mortgage market.
In essence, the watchdog is attempting to prevent property landlords from taking on too much debt.
If you’re concerned about the level of lending your property portfolio is costing you, our expert property tax specialists could advise you effectively, and start saving you money immediately. Get in touch here.
Some lenders – including HSBC, Royal Bank of Scotland and Barclays – already have strict stress tests in place for all property landlords looking to borrow on buy-to-let mortgage deals.
Others, such as Coventry Building Society, are believed to be more relaxed on borrowers who take five-year buy-to-let mortgage deals from January onwards in 2017.
What is clear is that the Government delivered several blows to property landlords in 2016. It appears that the attempt to slow down short-term borrowing on buy-to-let mortgages will be another attempt in 2017.
Advice for buy-to-let property landlords in 2017
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