Buy-to-let property investors who own four or more mortgaged properties are still keen to expand their property portfolios, despite new regulatory changes which require them to undergo ‘stress tests’ when applying for a new mortgage.
In September 2017, the Prudential Regulation Authority (PRA) phased in new rules which require mortgage lenders to thoroughly assess portfolio landlords’ rental income and to perform ‘stress tests’ on them to determine whether they would be able to handle an interest rate increase.
The new changes to the mortgage application process – which affect landlords who own four or more mortgaged properties – also place a significant administrative burden on landlords seeking to expand their portfolios.
This is because landlords must carefully check and prepare in-depth tax and financial information in relation to their property portfolio before they can secure another mortgage.
However, research from prominent lender Accord Mortgages appears to suggest that the time-consuming new changes have failed to deter buy-to-let investment.
Demand for buy-to-let mortgages was strong throughout the course of 2017 – and 32 per cent of all applications received by Accord came from so-called ‘portfolio landlords’, its statistics show.
“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.
Accord has suggested that many savvy landlords are wisely seeking specialist tax advice ahead of preparing their applications. This is very important, as if the financial information required for a mortgage application is not properly prepared and checked, an investor’s mortgage application may be rejected.
