Criteria tightens on buy to let mortgage lending…
National residential property lettings
specialist, Belvoir is urging thousands of British property owners classed as
‘accidental landlords’ to seek specialist buy to let advice from industry
experts following a new European ruling on mortgage regulations.
Accidental landlords are typically
people who, after a change in their circumstances, struggle to sell their home,
so end up renting it out. Divorce,
separation, bereavement or job relocation are some of the reasons why owner
occupiers hang on to a property to turn it into a ‘buy to let’ investment.
Phil Pinkney, who co owns the Belvoir office on Bridge Street in Andover, says: “Currently, in cases such as these, banks will usually
allow homeowners to switch a mainstream mortgage over to a landlord loan or
alternatively ask them to pay charges to be allowed to retain a residential
mortgage and then rent the property.”
“However, the UK Treasury has announced
that new EU legislation, the ‘European Mortgage Credit Directive’ which comes
into force in March 2016, will introduce partial regulation of Britain’s buy to
let market - which could, potentially,
make it more difficult for homeowners to make this simple switch.
“Unlike mainstream owner occupier mortgages,
buy to let lending for professional investment landlords is usually viewed as
‘business’, not ‘consumer’, borrowing.
“But under this new Directive, the
Treasury says that landlords who are letting a property “as a result of circumstances rather than
through their own active business decisions” will now be classed as consumer
not business borrowers, and will need to be covered by a tighter, regulated
framework.”
He goes on to say “As with the introduction of any new legislation, it is important for
landlords to get professional and realistic rental assessments from experts who
understand the buy to let market as this will help to ensure that rental
returns add up and landlords are able to meet the new lending criteria.
“Whilst the changes will not affect mortgages
taken out by regular investment landlords, they could impact on both existing
and prospective ‘accidental landlords’ so we would recommend seeking out
professional advice in advance of the new rules in 2016 .”
Commenting on the EU announcement, The
Council of Mortgage Lenders has said that many lenders could struggle to
distinguish between ‘consumer’ landlords and buy to let professionals.
Last year over 151,000 buy to let
mortgages were taken out – representing 12 per cent of total UK lending.
Industry experts predict a continuing buoyant market in buy to let, with a
projected rise of up to 3 per cent in mortgage activity.
“If
you are already an ‘accidental landlord’ in our area, or could be about to
inherit a property that you intend to rent out, it would be beneficial for you
to contact us for a free, initial consultation to discuss your aims and
objectives, so that we can help you take a long
term view of your property investment needs,” adds Phil.
“As
one of the UK’s largest and well established property lettings specialists we
are able to offer a wide range of advice and services on a regional as well as
national level and, importantly, use our local knowledge to help guide you
through the opportunities available in our area.”
For more information on letting a property, contact Andover's leading letting agent BELVOIR!
Tel. 01264 366611
Email andover@belvoirandover.com
Google+ +Belvoir Andover Estate & Lettings Agent .
www.BelvoirAndover.com
