Posts with tag: buy-to-let lenders

New buy-to-let products announced at Landbay

Published On: January 5, 2017 at 10:49 am

Tags: Buy-to-Let,buy-to-let lenders,buy-to-let mortgage,Landbay

Landbay, the peer-to-peer mortgage lender, has today announced a new range of products specifically aimed at professional buy-to-let landlords.

New products on offer include standard term trackers, beginning at 3.88%. In addition, there are now HMO trackers from 3.98% and Expat trackers from 4.38%.

Products

What’s more, there are now fixed rate products available at 4.2%, including a five-year fix deal from 4.4%-including interest coverage ratio (ICR) based on pay rate.

In addition, Landbay has moved to increase the maximum LTV to 80% on certain products.

All new products offered by the lender use pay rate to assess ICT calculations, but Landbay runs an underlying affordability calculator to make sure the application can meet a minimum ICR of 125% at 5.5%.

New buy-to-let products announced at Landbay

Complex

Paul Clampin, Chief Lending Officer of Landbay, observed: ‘The buy to let market is set to become more complex in 2017, as landlords face an increasingly intricate lending landscape and tighter regulation. It’s in such a context that borrowers and brokers need solutions that meet their changing needs, so these new products have been designed to do just that for the growing number of professional landlords.’[1]

‘As landlords move to navigate this complex environment, so too must lenders ensure that affordability calculations are robust and in line with the rest of the industry. This is why we have chosen to refine our ICR calculations,’ Clampin added.[1]

[1] http://www.propertyreporter.co.uk/landlords/professional-btl-range-launches-at-landbay.html

6 in 10 landlords think they will be impacted by tax changes

Published On: January 3, 2017 at 11:16 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,buy-to-let lenders,landlords,limited company,tax

The most recent Property Investor Survey from Mortgages for Business shows that 60% of landlords believe upcoming changes to tax relief and mortgage affordability checks will impact them.

This survey was conducted during a two-week period in November and a total of 283 landlords responded.

Tax impact

60% of respondents felt they would be affected by the changes, while 29% felt that they would not. It is predicted that these landlords are likely to be a mixture of basic rate income tax payers and those that have incorporated their portfolios and are subject to corporation tax.

David Whittaker, CEO at Mortgages for Business, said: ‘The percentages feel about right for the market in general and it’s certainly been a tough 18 months or so for landlords, so it’s encouraging to learn that the majority are getting to grips with changes that will dramatically alter the way they operate.’[1]

Somewhat alarmingly, 11% of landlords said that they were unsure if the changes would impact them directly.

These results marry closely with those from the Prudential Regulation Authority on buy-to-let lending. 60% of respondents to its survey said they understand the impact on borrowing, with 25% saying they partially understand.

6 in 10 landlords think they will be impacted by tax changes

Affordability

From 1^st January, buy-to-let lenders have been permitted to tighten affordability constraints in recognition of the larger tax burden on landlords. 9% of respondents to the PRA survey said that they were unsure how the affordability calculations would impact on their borrowing, while 6% said they were totally unaware of the new guidelines.

In addition, this survey revealed that many landlords are moving towards incorporation. 32% of those questioned said they owned at least a single property in a limited company. 54% said they would look to purchase through a limited company moving forwards.

[1] http://www.propertyreporter.co.uk/landlords/60-of-landlords-believe-new-tax-changes-will-affect-them.html

Could PRA proposals lead to increased activity?

Published On: April 28, 2016 at 11:14 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,buy-to-let lenders,landlords,Mortgage lending,PRA

Newly proposed underwriting rules for buy-to-let lenders as suggested by the Prudential Regulation Authority (PRA) could lead to an increase in market activity.

This is the view of buy-to-let specialist lender, Fleet Mortgages, who feel that landlords will look to secure finance before the PRA intervene.

Stricter conditions

Just last month, the PRA issued recommendations aimed at imposing stricter lending affordability measures on applicants looking for a buy-to-let mortgage. The PRA wants to see the amount of money being borrowed to be reduced,

Fleet Mortgages believes the new rules could come into place as soon as January 2017, but that some lenders will want more time to adapt to any alterations. Landlords and mortgage advisors could treat the coming months as they did in the period leading up to the stamp duty alterations on 1^st April.

This period saw a surge in buy-to-let mortgage demand and activity and Fleet Mortgages suggests landlords looking to remortgage are more likely to do so before the new PRA lending criteria comes into play.

What’s more, it is feared that landlords with a large portfolio could be most affected by the changes, with many looking to secure finance in 2016 instead of waiting.

Increases

Bob Young, Chief Executive Officer of Fleet Mortgages, noted, ‘many have suggested that the recent stamp duty deadline is the only one facing the buy-to-let sector and market activity will now wither on the vine as landlords take stock of their positions for the foreseeable future.’[1]

‘The recent PRA consultation on buy-to-let underwriting actually makes it more likely that we will see activity levels begin to increase again over the course of the year as we get closer to the implantation of the rules. Certainly, given their intention to drive down the amounts buy-to-let landlords can borrow, it would be logical to think existing landlords seeking to remortgage or capital raise or both will make the most of the current market conditions which will allow them to borrow at higher levels,’ Young continued.[1]

Could PRA proposals lead to increased activity?

Compromised

Mr Young went on to say, ‘Once the new rules kick-in, landlords and their advisers may well find their ability to secure the money they want has been compromised by the stricter underwriting criteria imposed on lenders, plus of course the likelihood that increased capital requirements will also impact on lender’s ability to offer the same levels of funding. It all adds up to the potential for renewed vigour in the buy-to-let sector, especially for those who may be deemed portfolio landlords, given the special affordability requirements they will face next year.’[1]

Offering advice to landlords, Young stated, ‘Our advice to advisers is to make sure any clients with these circumstances are contacted and they are made aware of how the lending landscape might change in 2017. Those in a position to make their new mortgage arrangements now are likely to find a much more hospitable lending environment, rather than waiting for lenders to implement these new rules and ultimately for them to end up disappointed.’[1]

[1] http://www.propertyreporter.co.uk/landlords/could-new-pra-proposals-reignite-market-activity.html

CML lambasts Government for out of date information

Published On: March 24, 2016 at 10:23 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,buy-to-let lenders,government,landlords,legislation,Stamp Duty

The Council of Mortgage Lenders (CML) has lambasted the Government for failing to update its Private Landlords’ Survey for the past six years.

If it had done so, the CML believe it may have had a ‘better understanding’ of the requirements of the private rental sector.

Resist reforms

Communications manager at the Council of Mortgage Lenders Bernard Clarke feels that the Government needs to resist with further reforms affecting the buy-to-let market.

Writing in a blog on the CML website, Mr Clarke said that landlords have yet to fully take in the series of tax changes that come into force next Friday-the 1^st of April.

In addition, Clarke believes that buy-to-let lenders are extremely diverse, so will not be suited to the Government’s ‘one-size fits-all’ regulatory regime.

CML lambasts Government for out of date information

Limits

Mr Clarke went on to say that proposed legislation will allow the Bank of England’s Financial Policy Committee to put limits on buy-to-let loan LTV ratios. He also said that the Committee would be able to impose limits on interest cover ratios, which assess rental income relative to the total overall cost of the mortgage.

‘We believe that (tools to control buy to let lending) should only ever be used with great sensitivity and preferably only after consultation and the publication of analysis and assessment of the likely effects,’ Clarke observed.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/3/mortgage-lenders-tick-off-government-for-out-of-date-lettings-info

Barclays is First Major Lender to Tighten Buy-to-Let Criteria

Published On: December 3, 2015 at 11:23 am

Author: Em Morley

Categories: Finance News

Tags: Bank of England,Barclays,buy to let mortgages,buy-to-let lenders,finance,landlord tax relief

Barclays is the first major mortgage provider to tighten its criteria for buy-to-let lending.

Barclays is First Major Lender to Tighten Buy-to-Let Criteria

The bank announced that from 7^th December, its rental cover ratio will rise from 125% to 135% for all new applications. This decision was made after the summer Budget revealed that buy-to-let mortgage interest tax relief will be cut from 2017. Landlords are expected to incur higher costs as a result.

It is believed that Barclays’ change in criteria could spread out into the market, with other lenders adopting the same rules.

From Monday, all new buy-to-let applicants must prove that they can cover the mortgage payments by 135% of rent.

All existing buy-to-let and permission-to-let mortgages will continue to be assessed at 125% as part of the overall affordability calculation and the affordability rate will stay at 5.79%.

In July, Chancellor George Osborne announced that tax relief for landlords will be gradually reduced to the basic rate from April 2017.

In a statement from Barclays to intermediaries, the bank said that the increase in rental cover ratio will ensure new customers are protected in the long-term.

Chief Executive of mortgage broker SPF Private Clients, Mark Harris, believes the bank is likely to be the first of many lenders to make this change to their buy-to-let criteria.

He adds that the industry is coming to a point where buy-to-let will become a 50% loan-to-value (LTV) product in the South East and London at least, putting a small-scale investor into the same category as a large landlord.

He says: “This means that if you are going to invest in property, you won’t be leveraged at 85% LTV, for example, which was commonplace during the boom, but will need to find a lot more equity.”

He also states that when investors are hit by the higher rates of Stamp Duty from April, smaller landlords will be dropped in favour of wealthier investors. Find out more about the changes in Stamp Duty here: /btl-homes-hit-with-increased-stamp-duty/

“These developments are not good news for tenants, as landlords will inevitably push up rents if they can to cover some of their higher costs and removal of some tax breaks,”¹ Harris concludes.

The Bank of England has also announced that it is ready to cool the buy-to-let market. Read more: /bank-of-england-stress-tests-results-revealed/

¹http://www.ftadviser.com/2015/12/01/mortgages/mortgage-products/barclays-buy-to-let-criteria-change-could-move-other-lenders-EgwhCcHiqlXNhb9mucbFiO/article.html