Lenders lobby for no change
The buy-to-let market has been hit by it’s fair share of bad news lately following a bumper year for property investment. Paragon, specialist buy-to-let lender, showed figures of over 100% increase in just a few months. However, regulators and the Bank of England (BofE) are still looking at potential crackdowns in buy-to-let mortgage lending to ensure this part of the sector doesn’t cause wider concerns for the UK economy.
Possible lending restrictions for landlords
Aside from the news of extra Stamp Duty Land Tax (SDLT) and tax cuts for landlords, financial regulators, including the Financial Policy Committee (FPC), are considering tightening the rules for buy-to-let mortgage lending.
This has stemmed from a fear that this part of the housing sector has accelerated rapidly this year and could result in market stability issues in the future, through credit risk for banks and through amplified movements in the housing market.
The BofE last year restricted the lending for residential properties, only allowing a certain proportion of mortgages to be granted at more than 4.5 X the borrowers income. There is a possibility the same measures will be enforced with buy-to-let.
A demand for rental
Paragon specialist bank believe that restriction measures are not necessary, and that the driving force behind an increase in investment is in fact linked to a changing population, with more immigration and higher property prices resulting in higher demand for rental.
Paragon are in regular contact with the BofE and regulators to stress that risks are not rising.
“…risks are not growing and so they do not need to act” Nigel Terrington, Paragon
There will be more news on this topic in the coming months as we see the next move from the financial regulators.
Dental & Medical Financial Services can help organise a buy-to-let mortgage for your investment. Act soon as the clock is ticking to the April 16 deadline to avoid excess Stamp Duty.