From the 30th September 2017, the mortgage lending criteria for landlords with four or more buy-to-let properties will change as they will be considered ‘portfolio investors’.
The new rules being introduced by the Prudential Regulation Authority (PRA) mean that lenders will now take into account landlords’ total income versus borrowing across ALL properties. This change in criteria is designed to ensure that borrowing on any new properties does not have a negative impact on the landlord’s ability to repay loans on other properties within their portfolio.
One of Britain’s biggest lenders, Santander, has already told mortgage advisers that it will cease lending to landlords with large portfolios who want to increase their borrowings. It will continue to lend for the purposes of ‘pound-for-pound’ remortgaging, but even then only with tighter rules around purchase date and income.
However, the new rules will apply only to individual landlords, not to those who own their portfolio through a limited company.