It has been revealed that the number of buy to let mortgages has decreased. This follows new affordability regulations and the decrease in tax relief that landlords can claim.
The Daily Telegraph has reported that the number of commercial buy to let mortgages available has fallen from 1,482 in December 2016 to 1,408 in January 2017.
New affordability checks introduced in January 2017 mean lenders must satisfy themselves that landlords can receive at least 145% of their mortgage payments from rents if the interest rate increased to a hypothetical 5.5%. Under these regulations, some landlords will not be able to obtain a commercial mortgage.
Many of these withdrawn mortgage deals are for large loans, which are those that are most likely to be affected by the new affordability rules. Many lenders have cut back and now offer only their core product range, Some mortgage experts see this as a cautious policy, as lenders wait and see what affect the April tax relief cuts will have on the buy to let market.
Limited companies are not affected by the new tax relief cuts. Some lenders could increase the number of mortgages available to landlords using limited companies to own property.
The Council of Mortgage Lenders has announced that the amount landlords borrowed in October 2016 was down 21%.
There is no suggestion that lenders will pull out of the buy to let market as, despite the increased costs that landlords face, that are still profits to be made from owning rented residential property.