Tighter lending restrictions hit buy-to-let
The future of the buy-to-let market may be affected by new lending restrictions under proposals from the Bank of England, which says it is watching the sector very closely.
According to research by Property Partner, landlords may require a deposit of at least 40 per cent in order to purchase property in certain parts of England, including Cambridge, Worcester and Chichester, if proposals for new lending criteria go ahead.
Proposals from the Bank of England’s Prudential Regulation Authority also include ‘stress tests’, to determine whether investors could afford their mortgage repayments if interest rates increased.
The Property Partner study shows out of 85 towns and cities in the UK, up to 59 could become more ‘inaccessible’ to buy-to-let investors if the new restrictions are imposed.
Earlier this year, the buy-to-let sector was hit hard, after the former Chancellor George Osborne introduced an additional three per cent stamp duty surcharge on purchases of second homes.
Concerned investors with plans to expand their property portfolios are advised to act fast, before any changes to lending criteria can be implemented by the Bank.