The market has seen a growing number of Buy to Let portfolio landlords as a result of continued demand for rented accommodation. Despite the regulatory changes, including the PRA (Prudential Regulation Authority) mortgage underwriting changes, and tax changes, there are still some valuable investment opportunities for those looking to own multiple Buy to Let properties.
However, it is well worth seeking professional advice from one of our highly experienced Mortgage Managers, given the increasing level of complexity in arranging Buy to Let mortgages as a portfolio landlord.
To discuss your options with one of our Mortgage Managers, please call us or request a quote.
We can help you review your current mortgages to see if better mortgage products, more suited to your needs are available to you. Alternatively, if you want to know how the changing regulation will impact on your borrowing position.
New Buy to Let mortgage regulations
Prudential Regulatory Authority (PRA) mortgage underwriting changes
As of the end of September 2017, the new PRA mortgage underwriting changes come into force. In the past, you would be considered a portfolio landlord if you were a full-time landlord, had multiple Buy to Let properties, leased student accommodation or House of Multiple Occupation (HMO) properties. However, now, with the new PRA changes in force, lenders must treat you as a portfolio landlord, if you have four or more mortgaged properties.
This is an important market change, of which all Buy to Let investors should be aware, as it affects the stress testing of the mortgage and, as a consequence, how much you can borrow.
Going forward landlords with 4 or more mortgaged properties looking to take out an additional mortgage or remortgage will have to provide additional information to lenders. This will include information about your existing Buy to Let properties, your landlord experience, use of letting agents and future portfolio plans. Before a mortgage application can be submitted, you must cover all of these points.
Buy to Let tax bill changes
Both the extra 3% stamp duty on second homes, and cuts to mortgage interest tax relief on Buy to Let properties, phased in from April 2017 have had a considerable impact on the UK Buy to Let market. Higher rate taxpayers now have to pay more income tax, as the ability to deduct mortgage interest from their rental calculations, before calculating their tax bill, is now being eroded.
By 2021, all landlords will have to pay tax on all gross rental income received, less allowable expenses. This change means that, effectively, landlords will be taxed on their turnover and not their profit.
It is important to note that the impacts of the changes will affect those purchasing or remortgaging property through a Limited company differently, as opposed to in a personal name.
Buy To Let Portfolio Mortgages
Recently more Buy to Let products have become available to the benefit of individuals, partnerships and limited companies looking for mortgages on a new property or to refinance existing properties.
These products may be used for single let residential houses and flats, properties that include a mix of residential and commercial elements, blocks of flats, houses in multiple occupation (licenced HMOs), multiple apartments on a freehold title, student accommodation, flats above commercial premises or prime low-yielding properties.
We may be able to arrange a bespoke mortgage solution for you through our private bank. We have strong relationships with a range of private banks and niche lenders who will consider each client on an individual basis.
As well as the increasing number of Buy to Let mortgage products becoming available, we have also seen an increasing number of banks adapting their product offering to meet the changing needs of borrowers. Traditionally this form of borrowing was primarily available from Private Banks. However, you may now find that other lenders may also be able to provide you with the lending you require.
As a result of changes in the Buy to Let market, some banks have decided to open up the flexibility of their mortgage products by lifting upper lending limits or the maximum number of properties they will mortgage.
Seeking specialist advice
If you are an experienced Buy to Let investor looking to grow your portfolio, remortgage an existing property or simply find out more about the products mentioned above, seeking professional advice could be highly beneficial. Our team of specialist Mortgage Managers can help you source the most suitable Buy to Let Portfolio mortgage for your needs via our extensive network of banks and private lenders. We can talk you through the complexities of the new regulation and the range of products that may be available, to find you the best deal, that is suited to your circumstances. Call us or request a quote to see how we may be able to help you.