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Stricter affordability tests proposed for Landlords

Sue Woodall, Solicitor, Director and head of Astle Paterson’s Conveyancing Department discusses the latest proposed changes facing the buy-to-let market.

Sue said “The Prudential Regulation Authority (PRA) – part of the Bank of England, has stated that buy-to-let purchasers are more likely to default on their mortgage.

In light of this, the PRA has proposed that mortgage lenders should introduce stricter tests when deciding whether to grant potential landlords a mortgage for them to purchase an investment property.

The proposed new rules include, first, stricter affordability testing which would include giving consideration to costs associated with renting a property (including tax liabilities) and, where a potential borrower intends to use personal income in addition to anticipated rent to fund the mortgage, details of their personal income and liabilities (including income tax, national insurance, other outstanding debts and living costs) – and secondly, interest rate affordability stress testing through the bank assessing a borrower’s capability to meet mortgage payments in the event of an interest rise.”

The consultation around the proposed changes is due to last until 29th June 2016.

Should you be in the process of buying a property, either as an investment or if you are moving home, Astle Paterson are Conveyancing Quality Scheme accredited and can advise and assist you through all aspects of your property transaction. 

Please contact our conveyancing department on 01283 531366 or by email at conveyancing@astlepaterson.co.uk.

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