Portfolio landlords still keen to invest despite regulatory changes
Landlords who own four or more mortgaged properties are still keen to expand their property portfolios, despite significant regulatory changes introduced in September last year.
According to research from mortgage lender Accord, demand for buy-to-let mortgages was strong throughout the course of 2017 – and 32 per cent of all applications came from so-called ‘portfolio landlords’.
“We have seen a significant demand for buy-to-let mortgages from both experienced and first-time landlords this year,” said Chris Maggs, Commercial Manager at Accord.
“2017 was a year of remortgaging for landlords who reaped the benefit of some exceptional mortgage rates, and 2018 is likely to be no different,” he said.
This is despite the fact that significant changes to the mortgage application process now require portfolio landlords to prepare substantial tax and administrative information in relation to their property portfolio before they can get another mortgage.
In September 2017, the Prudential Regulation Authority (PRA) phased in new rules which require mortgage lenders to thoroughly assess their rental income – and to perform ‘stress tests’ to determine how they would handle a potential interest rate increase.
Before these can be undertaken, landlords need to supply detailed tax and financial information, which they must take great care in preparing, as any errors noted by the lender may result in a rejection of their mortgage application.
Nevertheless, Accord has suggested that the new changes have not deterred investment in the market – as many savvy landlords are wisely seeking specialist advice ahead of time.