2015 was hardly a good year for landlords and regulation. however, with George Osborne hiking stamp duty a few days ago, and the bank of England planning an additional crackdown on leading rules for landlords it looks like 2016 could be an even worse year.
According to the Mail Online regulators fear that the current boom in the market is getting out of control and may pose a risk not just to the housing market, but to the entire Financial System. It is reported that the bank of England expects these changes to result in as much as a 20% fall in gross lending to buy to let landlords.
However, as the Huffington Post rightly points out, the reduction in supply and accompanying increase in landlord costs can only hurt went as you will face boat higher rents and a reduction in available properties.
We have yet to see the full impact of the new proposals, however in the residential mortgage market there are already a significant number of homeowners unable to remortgage after changes in lending criteria. It is not unreasonable to expect that there’ll be a similar impact on landlords who were marginally able to achieve mortgages under the current rules and will be unable to remortgage existing finance and obtain finance for new properties under the new legislation.
Concern landlords should discuss the impact of tightening regulation on their future lending requirements either with their lender or the financial adviser or mortgage broker to ensure that they do not overcommit to finance which will become unsustainable after the bank of England extends this current tightening of rules.