The latest buy-to-let changes to affect investors will this time be felt by portfolio landlords who are looking to make another investment.
The Bank of England have placed new, tougher requirements on lenders including the interest rates-dependent ‘stress test’ on new mortgage applications. Any lenders who agree to fund an investor will have to look at the total portfolio of four or more mortgaged properties before making a decision about the type of financing for the single property application. This is because the whole portfolio has to be underwritten when applying for a new mortgage.
For multi-property landlords this may be a challenge as the whole portfolio has to be viable and most lenders have adopted the new rules meaning shopping round to find a lender who won’t apply this new criteria may be difficult. The amount of taxable income that you earn, the number of buy-to-let properties you own and whether you are part of a limited buy-to-let can affect the amount of the loan.
You can still be proactive as a portfolio investor even if you are not ready to invest again immediately. Having complete documentation of your buy-to-let properties and mortgages is an important first step and up-to-date proof of tax paid on your buy-to-let properties would be useful.