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Government Changes to Buy-To-Let Property Lending

  • 21 April 2016
  • Number of views: 1116
Government Changes to Buy-To-Let Property Lending

New policies have recently been introduced by the Bank of England to assess buyers’ eligibility to purchase a buy-to-let property. The Government and Bank of England have slowly been clamping down on mortgage lending to those wishing to buy rental properties in a bid to avoid a repeat of the boom and bust cycle that hit the Housing Market in 2006/07.

New restrictions in place mean that lenders will need to check that buyers can meet the costs associated with letting out a property such as drafting rental agreements, advertising their property as well as associated property taxes.

The changes in policy will not only affect those with a small housing portfolio, those with over 4 rental properties will face further financial scrutiny on their borrowing levels.

These recent changes are by no means new thinking, the Government has introduced a number of changes over the years including capping home loans and increasing stamp duty on larger properties.

With all these restrictions you could be forgiven for thinking the rental property market would have taken a dive but this is not the case. Despite the tighter legislation house prices have continued to rise and the rental market is still as strong as ever proving that the market cannot be manipulated.

If you would like to read more about these changes and their impact on the rental market, financial columnist Matthew Lynn has published this interesting article in the Telegraph.