As we approach the end of 2016, it has been another interesting and challenging year. UK interest rates continue to remain low at 0.25% with banks, building societies and mortgage lenders still offering low rates for both residential and buy to let mortgage products. The choice of mortgage lenders has increased, however lending criteria is still seen as a little restrictive.
For buy to let investors I am sure 2017 will offer further investment opportunities despite the challenges set by the increases in Stamp Duty and Land Tax (SDLT) changes to BTL/second homes, changes to tax relief on mortgage interest along with changes to the underwriting standards for BTL, set to be implemented in 2017.
Within the last couple of weeks, we have seen some of the major BTL lenders such as Birmingham Midshires, Virgin Money, Precise Mortgages, Coventry/Godiva Mortgages and Santander making changes to the stress testing for BTL mortgages.
If we look at Birmingham Midshires, the current 125% rental cover ratio on BTL applications will remain unchanged for basic rate tax payers. For higher and additional rate clients, the rental income requirement will be tailored to the client's individual circumstances.
All applicants will be assessed on an individual basis to ensure that rental income includes the additional tax the landlord may be liable for.