Landlords - Under attack again!

Sorry for being the bearer of more bad news for the landlord brigade but they had better sit up and take notice on this one. This could be a game changer for anyone who has 4 or more buy to let properties and given the fact that we are only a month away from implementation, it is concerning that I have only come across a handful of lenders who appear to be geared up to telling the widen public of the changes and the impact of those changes. So what are the changes?

From 30th September, lenders will have to take into account not only the individual transaction but also the overall customer portfolio position. A portfolio application will be where a customer has 4 or more mortgaged BTL properties including the new transaction. Mortgaged properties will include those that are held in a personal name, Limited Company and or any other legal entity. This will mean that the overall agregate of the portfolio must have a 75% LTV

And There's more. There will be a minimum aggregate portfolio Rental Cover Ratio. BM Solutions has announced theirs at 145% at 5.5%. So you need to ensure that your poorer yielding properties don't drag you down when you are applying to remortgage or increase the size of your portfolio.

There's more. One of the big players BM Solutions will have a £30K earned income requirement. Something that BM have shied away from in the past leading it to become one of a couple of go to lenders where the landlord is not declaring a sufficient income that most other lenders demand. Is the net tightening on landlords?

And more. BM Solutions have also put a limit of 10 BTL properties in a portfolio. They will still have their 3 property rule for any BTLs within the Lloyds banking group but have added a portfolio limit so that they will not lend where the portfoilio totals 10 or more.

The consequences will be far reaching and include amongst other things:-

1. It will become more difficult to remortgage as lenders pour over the criteria to see if the portfolios fit. This will lead to landlords being at the mercy of their existing lender for a better rate as they are forced to product change and cannot remortgage to a better rate with a different lender.

2. Not going to be too easy to capital raise given the overall portfoio requiring to remain at 75%.

3. More paperwork will be required and more information given to the lender in relation to the exsting portfolio. Borrowers will now need to be prepared to give rental details, purchase prices, current values, tenancy details, mortgage details, current lenders etc etc

4. Lenders are likley to be stuck with poor portfolios when the musice stops at the end of the month. They had better hope that they have a seat when it does!

5. And the lenders haven't even looked at Airbnb and how they are going to deal with that going forward. Not one of the major high street lenders has come out with a policy on Airbnb so how are these going to be looked upon when you have to divulge that some of your properties are on serviced accomodation and not a short assured tenancy. Hands in pockets and stare at the ground time for a few landlords I suspect.

There has been a constant stream of change that has affected the BTL market over the last 18 months and there only seems to be one certainty and that is change! If you would like a confidential chat on how the new legislation is going to affect you then get in touch.