Copy article

Buy-to-let mortgages

Journalist: Natalie Thomas, Freelance

ended 22. September 2023

Hello, I am writing a feature for Mortgage Strategy magazine looking at what can be done to help the BTL market. My questions are:

  • What can the Government/regulator do to help the BTL market?
  • Why is it so important to help the BTL sector ( number of people renting, FTBs unable to get on the property ladder etc) 

4 responses from the Newspage community

Copy all

Copy

Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
Simply reduce the level of stress testing used on buy to let, which is overkill and the biggest obstacle to most landlords borrowing aspirations. With payments usually on interest-only being lower than the rent received why should the stress tests stop landlords having the option to remortgage, or borrow enough for a purchase. A simple stress test of 125% based on the product rate would be beneficial.
Copy

Platinum
Elliott Culley
Director at Switch Mortgage Finance
Removing the option to offset your mortgage payments on your tax liabilities hit the landlords hard, especially when coupled with the rising costs of mortgages. There are fewer rental properties now than there were before this came in, which was the idea behind this change. However, buying your first house hasn't got any easier and fewer rental properties have led to higher rents and less choice for renters. A rethink needs to occur in this market space, as currently, it does not work for either party well.

From a lender's perspective improving the stress test affordability calculations would certainly help as costs for landlords would certainly be less meaning passed-on costs for tenants would also decrease.
Copy

Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
The government could help by lowering the stress test requirements on products that are fixed for less than 5 and just stress them at the current rate rather than at rate + 2%. This would allow landlords to refinance off variable rates and potentially secure lower rates for 2 years upon which they can refinance and benefit for possible lower rates at that time. This would mean that Landlords do not need to increase tenants rents just to be able to refinance their properties. Of course, this is a very difficult financial time for many especially renters and many of them cannot afford a rent increase of any kind, let alone the level of increase the landlords are having to do just to be able to refinance.
Copy

Jon Davis
Founding Director at Davis & Co Financial Solutions Ltd
The BTL market is a cornerstone of the UK housing landscape, and its vitality impacts countless lives. It isn't just about property; it's about homes, livelihoods, and futures. With a growing number of people renting and first-time buyers struggling to access the property ladder, fostering a thriving BTL market isn't just good economics; it's a lifeline for countless individuals seeking a place to call home. Re-evaluating Stamp Duty Land Tax (SDLT) and Capital Gains Tax (CGT) policies, could incentivise investment, making it more accessible for first-time BTL buyers and supporting landlords who provide crucial housing options.