Bank proposes new rules for Buy to Let market

New rules for the property market are being proposed by the Bank of England.
Its Prudential Regulation Authority (PRA) has called for stricter limits on the amount that buy-to-let landlords can borrow.
The Bank wants lenders to take a wider look at a borrower’s financial situation rather than just the rental income from a property.
These include all the costs a landlord might have to pay when renting out a property, tax liabilities, a landlord’s personal tax liabilities, essential expenditure and living costs.
The PRA also wants lenders to probe a landlord’s additional income if this is being used to support borrowing.
Furthermore, it has recommended that ‘stress tests’ be applied in much the same way for someone applying for a residential mortgage to measure affordability in the event of a rise in interest rates.
The PRA said the new standards would ‘curtail inappropriate lending, and the potential for excessive credit losses’.
However, some analysts say that the rules could hit lending to landlords by up to 20% over the next three years and prompt an exodus from the market- leading to higher rents and exacerbating the affordability gap .
The PRA is welcoming comments as part of a consultation until June 29.
The latest developments for the property industry come as a 3% stamp duty surcharge on second properties comes into force on April 1.
In addition, from 2017, landlords will only be able to claim tax relief on their mortgage payments at the basic rate of 20%.
And from 2019 they will also have to pay any Capital Gains tax due within 30 days, rather than simply by the end of the tax year.
We’ve seen the demand for our services – especially surveys – accelerate over recent months as buyers race to beat the April 1 deadline for the Stamp Duty levy.
Any moves to strengthen the property market are welcome although the Government and the Bank of England must get these right.
Spring has started well for the industry and we will watch with interest to see what impact any changes have over the coming months.
You can read more on the BBC website at
You can also call us on 02392 697193 for more details or email [email protected].
We’re also on Twitter @McAndrewMartin, on Facebook and LinkedIn under our name.

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