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Buy-to-let mortgage crackdown ‘disregards renters’

Government-backed plans to impose new restrictions on the availability of buy-to-let mortgages are likely to be bad news for tenants.

That is the view of Steve Bolton, founder of Platinum Property Partners, who believes that tougher lending criteria, allied with stamp-duty rises and limits on mortgage interest tax relief, will force landlords either to sell up or increase rents.

Bolton said: “If the Government is concerned about buy-to-let investment overheating the housing market, then enforcing stricter lending criteria is a sensible measure. Taken in isolation, the pre-emptive move is responsible, as increasing the rental income to mortgage payment ratio will ensure investors don’t overstretch themselves.”

However, Bolton added, the combination of tax changes and restrictions on loan availability will have the “unintended consequence” of reducing the number of buy-to-let properties and increasing costs for tenants.

“Many landlords’ profits will take a tumble once tax relief is phased out, yet they will now need more rental income to qualify for an affordable mortgage deal. This is bad news for landlords looking to remortgage or expand their property portfolio, and incredibly off-putting for those entering the market for the first time.”

Bolton added: “With mounting cost pressures, some landlords will either have to sell-up – further reducing rental property supply – or put up rents to stay afloat. Given the amount people pay in rent directly impacts what they can save towards a deposit, it is ridiculous the Government has completely disregarded renters in their quest to get people on the property ladder.

“This time last year, tightening lending criteria would have been a good way of preventing the market from overheating. But after several blows for landlords, it will now be one more nail in the coffin for some.”

Bolton said that the only way for ministers to ensure the rental sector remained functional was to backtrack on next year’s plans to limit the amount of tax relief than landlords are eligible to claim on mortgage interest payments.

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