A new survey from Foundation Home Loans suggests that buy-to-let landlords may be struggling with financing purchases in the wake of new Prudential Regulation Authority (PRA) rules. A large number told the lenders that the changes have increased application times and decreased available mortgage options. However, behind the figures may be a broader change that will benefit the sector.
The Foundation Home Loans survey spoke to over 800 UK landlords. 48% of all respondents said the introduction of new PRA rules last year slowed down the purchasing process. Of those with more than four buy-to-let properties, 70% said that they have found it harder to access finance.
The stats come at a time of heightened concern over landlords approaching the end of their two-year fixed-rate deals. Many raced to beat the 3% stamp duty surcharge in 2016, and now face stricter mortgage regulations as they look to remortgage.
However, the stats also reflect a time of change in the market. Delays to mortgages often occur as private landlords register as limited companies to avoid recent tax hikes – something that will skew the data as landlords settle on their chosen structure for the long-term.
Similarly, worries over access to certain deals may also settle as lenders use stricter regulations to tailor their products to specific customers. This process that will naturally mean many landlords have less choice, but may also make it easier to identify the most cost-effective products for their portfolio. And there’s certainly hope that rates will remain competitive. NatWest, for instance, has already reduced rates on buy-to-let mortgages and remortgages.
Need for stability
Some landlords will understandably still be concerned. However, the long-term goals of encouraging financial stability and specialist lending could yet stabilise the market – a development that would be welcome after years of new taxes, rules and political developments. It may even help prevent debt-related problems going forward.
However, we believe that to truly encourage stability, the government must also support property owners as they try to manage their cash flow. While the market finds its level, it’s vital that landlords are able to pursue unpaid rent in a firm but fair manner. For information about how Dukes' ethical debt collection services can help, contact one of our operators today.