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Landlords urged to remortgage in response to tough BTL lending criteria

Landlords are being urged to remortgage in order to prepare for the reformed buy-to-let lending criteria due to be introduced in September.

Buy-to-let (BTL) remortgage transactions, as a share of the total lending market, has risen over the last few months, leading to a lower demand for new buy-to-let loans.

The National Landlords Association (NLA) say the rise in remortgages is down to landlords looking to reduce their exposure to the new buy-to-let tax system.


The Bank of England’s Prudential Regulation Authority (PRA) changes are the latest attempt to tighten the lending criteria following measures introduced earlier this year.

Chris Norris, head of policy at the National Landlords, said: “Since the PRA regulations were introduced in January, the marketplace is looking considerably more complex. It was always likely that lenders would start to demand more evidence from applicants, and landlords are already feeling they have to go further to prove that they can afford finance.


“Changes to buy-to-let taxation will eat away at many landlords’ profits and make it more challenging for them to manage their businesses,” he added. “As a result, many are looking to limit their exposure to the changes, which is why we’ve seen a rise in remortgaging.”

The NLA’s quarterly landlord panel shows that landlords are already struggling to arrange mortgages, with 43% saying the process of obtaining finance has become more difficult since the beginning of the year.

Some 53% of landlords say that they have to provide additional evidence to support recent mortgage applications, including tax returns, cash flow forecasts and business plans.

Norris continued: “The situation is due to worsen from September and while it may not be financially adventurous for everyone, if you’re considering remortgaging or expanding your portfolio then do so now to avoid any further difficulties.”


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