Leading Gloucestershire estate agent Country Property is encouraging those considering buying another property in order to let it out, to complete their purchase before 1st April to beat the Buy to Let 3% Stamp Duty surcharge".
Also from March 2017 the ‘EU mortgage credit directive’ is expected to make it difficult for aspiring landlords to obtain a buy-to-let (BTL) mortgage.
Country Property Proprietor Nick Cragg explains: “Investors must complete their purchase before 1st April if they are to beat the Buy to Let 3% Stamp Duty surcharge.”
Lenders say they are dealing with unprecedented numbers of applications for Buy to Let property, so time is severely limited if a loan is required to service a purchase.
Until now, BTL borrowers have enjoyed relatively cheap mortgages, with interest rates as low as 2% and no requirement to be subjected to the same affordability tests as those applying for a regular residential mortgage (the ‘Mortgage Market Review’ – a strict set of rules for homeowner loans which were introduced by the Financial Conduct Authority in 2014).
But from March 2017 lenders will have to distinguish between ‘professional’ and ‘consumer’ landlords. This could affect small-scale and so-called ‘accidental’ landlords, who are letting out their home because of a failure to sell.
Nick Cragg continues: “Currently BTL lenders are primarily concerned with expected rental income, rather than worrying about the borrower’s income and debt. However, from March any existing mortgages are likely to be taken into account – which could have a massive impact on the new amount they are able to borrow.
“So if someone already has a residential mortgage of £200,000, that figure could be deducted from the amount that lenders are prepared to offer – which in some cases would make the purchase of a buy-to-let property impossible.”
Nick Cragg added: “Aspiring landlords need to be quick before it’s too late.”