Mortgage lenders look set to impose more stringent checks on buy-to-let landlords seeking funds to acquire property, as part of a wider strategy to curb buy-to-let lending following the UK’s decision to leave the EU.
Richard Sharp, an external member of the Bank of England's financial policy committee, told MPs on the Treasury select committee last week that buy-to-let lending would probably “cool significantly” in the coming months.
“I suspect the banks will want to see what regime we're in terms of house prices before they go back to aggressive lending,” he said.
Under new recommendations from the financial policy committee, prospective landlords will need to ensure their rental income offers greater cover on their borrowing. Barclays, TSB and Nationwide have already implemented a proposal for rental income to provide 145% mortgage cover.
Buy-to-let landlords could be forced to stump up more than 60% deposits in some locations as a result of the new recommendations, according to research by the property crowdfunding platform Property Partner.
The number of new buy-to-let acquisitions has fallen sharply over the past couple of months following the introduction of the stamp duty surcharge on second homes from April, as reflected by a slump in mortgage lending to buy-to-let investors.