Buy to let changes for businesses
The buy-to-let market continues to adapt to change
Regulation, benefit and rule changes continue to alter the buy-to-let market.
Amendments to stamp duty, tax1 benefits and tighter lending rules for buy-to-lets continue to drive change in the market up and down the country.
The introduction of more stringent lending rules for buy-to-let mortgages by the Prudential Regulation Authority (PRA) in 2017 were also aimed directly at portfolio landlords – such as those with 4 or more buy-to-let properties2.
These new regulations3 require lenders to take a more specialised underwriting approach towards portfolio landlords. Each lending application must be considered in detail on its own merits.
This means looking not just at loan-to-value ratios, but at asset quality, concentration risk, the experience of the business owner, their overall financial position and the performance track record of their portfolio.
As the buy-to-let market becomes increasingly professional, this approach to lending is aimed at ensuring landlords can afford the debt they’re taking on, and serves as a timely reminder of the fundamentals of sound property investment. This should increase the resilience of the UK buy-to-let sector to future market fluctuations. A strong relationship with your lender is key to helping with your portfolio objectives whether its generating income, capital growth or clear exit plans.
However, we may see more small landlords, as well as some lenders to the sector, leaving the market as a result.
In response to the changes in the market and portfolio landlords’ need for greater flexibility, we’ve recently extended our buy-to-let loans from a maximum of 5 years to offer buy-to-let landlords loans for up to 25 years, with interest-only terms4 for up to 15 years.
This gives customers longer-term certainty, security and peace of mind, with no need to renegotiate after 5 years.
In some cases, loans can be amortised over a 30-year profile with a maximum commitment of 15 years, giving landlords the option of lower monthly repayments, with the outstanding loan balance repaid as a lump sum or renegotiated at the end of the commitment period.
Our specialist property teams across the UK work closely with clients to deliver the support, detailed local market knowledge and expert guidance they need to navigate the changing property landscape.