The call comes as the proportion of buy-to-let remortgage transactions, as a share of the total lending market, has risen over the last few months, and as a diminishing demand for new buy-to-let loans has driven many lenders to slash mortgage rates. The NLA says the rise in re-mortgages is down to landlords looking to limit their exposure to the new buy to let tax regime.
The forthcoming tightening of lending criteria is the latest in a series of attempts by the Bank of England’s Prudential Regulation Authority to cool the buy-to-let market, following measures introduced earlier this year.
The NLA’s most recent Quarterly Landlord Panel found that landlords are already finding it harder to arrange mortgages, with 43% saying the process of obtaining finance has become more difficult since the beginning of the year.
Furthermore, more than half (53%) of landlords report that they have had to provide additional evidence to support recent mortgage applications, including tax returns, cash flow forecasts, and business plans.
Chris Norris, Head of Policy at the National Landlords, said: “Since the PRA regulations were introduced in January, the marketplace is looking considerably more complex. It was always likely that lenders would start to demand more evidence from applicants, and landlords are already feeling they have to go further to prove that they can afford finance.
“Changes to buy-to-let taxation will eat away at many landlords’ profits and make it more challenging for them to manage their businesses. As a result, many are looking to limit their exposure to the changes, which is why we’ve seen a rise in re-mortgaging.
“However, the situation is due to worsen from September and while it may not be financially advantageous for everyone, if you’re considering re-mortgaging or expanding your portfolio then do so now to avoid any further difficulties”.
