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TODAY'S OTHER NEWS

Fears grow over latest buy-to-let clampdown

Mortgage brokers and property experts are warning that the latest attempt to dampen the buy-to-let market could backfire.

The Bank of England and the Prudential Regulatory Authority are lining up new affordability tests for lenders, on top of Chancellor George Osborne's serial tax crackdown.

Property experts say this could squeeze out ordinary investors, cut the supply of properties and drive up rents.

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Jeremy Leaf, a former RICS chairman and north London estate agent, said the changes were a classic case of slamming the stable door after the horse has bolted.

“The changes the Chancellor has made to mortgage interest tax relief and higher stamp duty for landlords will have enough of an impact without the need for further interference from the Bank of England.

“Landlords will already be put off investing further unless the numbers add up and this is a case of kicking them when they are down.”

Leaf said the Bank of England should have waited to see the impact of the Chancellor's changes before making further tweaks.

“The combined impact of all these measures will be to cut supply and increase the upward pressure on rents.

“A number of landlords will already have been tempted to sell before this latest round of proposed changes to the sector.”

Adrian Anderson, director of mortgage broker Anderson Harris, said that although he doesn't expect a mass exodus from buy-to-let it is likely to attract fewer investors in future. “Many will stick with their existing investments and not add to them, unless the argument for doing so is truly compelling.”

Anderson added: “It will certainly be harder to get a buy-to-let mortgage and while the Bank of England is not imposing a maximum loan-to-value cap, there will be a downwards pressure on LTVs, making buy-to-let the preserve of wealthier landlords.”

Kay Ingram, director of savings and investments at LEBC Group, said many existing landlords may need to remortgage or restructure their portfolio.

“Stricter lending criteria may mean that getting new mortgage finance may not be as easy as it was when the original loan was taken out.

“The removal of a standard 10% wear and tear tax allowance and to only get tax relief at basic rate on interest payments will clearly impinge on the affordability criteria.”

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