Warning over Buy to Let mortgage restrictions

Imposing lending restrictions on the buy to let mortgage market could have damaging consequences for landlords and the supply of rental properties, says property law consultancy Landlord Assist.

The firm is warning landlords that changes to mortgage lenders’ conditions could make it more difficult to find a buy to let loan or to remortgage an existing deal.

Late last month the Bank of England told banks not to give more than 15 per cent of new home loans to home buyers borrowing more than 4.5 times their annual income. It also told lenders to perform stricter tests to ensure borrowers can repay their loans when interest rates start to rise.

Although lending in the buy-to-let market wasn’t covered by the tougher rules announced by the Bank of England, remarks by key Bank officials suggest that the rental sector is to be closely monitored to ensure private landlords don’t take on debts they may struggle to repay.

“Clearly, we do not advocate landlords taking loans out which they can’t afford when interest rates go up but it is important that the income those properties generate is included within any affordability calculations” says Graham Kinnear, Landlord Assist managing director.

The firm says restrictions could reduce the supply of rental accommodation, at a time of significantly growing demand.