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Landlords finding it harder to secure a buy-to-let mortgage

Tougher buy-to-let lending criteria, introduced in September last year by the Bank of England’s Prudential Regulatory Authority (PRA), is making it more difficult for landlords to difficult finance.

Fresh research undertaken by the National Landlords Association’s (NLA) has found that two thirds of landlords - 63% - have found it harder to secure a mortgage following the changes, which were introduced in two stages last year. This increases to 70% for portfolio landlords, i.e. those with four or more buy-to-let mortgages.

The study also revealed that almost half - 48% - of landlords aware of the changes believe it has slowed down the finance process and 46% believe the changes reduce the range of mortgage products available.


The first stage in January 2017 required lenders to apply an interest cover ratio (ICR) of 5.5% to all products with terms of less than five years. More stringent stress tests were also introduced for all buy-to-let mortgages, with monthly rental income typically needing to cover 125% of mortgage repayments.

The second stage, introduced in September 2017, requires portfolio landlords to undergo specialist underwriting processes when seeking new buy-to-let mortgages. This includes additional affordability tests with providing supporting documentation such as business plans. It also means that underwriters must look at the landlord’s entire portfolio when considering new applications, not just the property needing to be financed.

Richard Lambert, CEO of the NLA, commented: “These findings show that the PRA’s changes seem to be greatly affecting the ability of landlords to find new finance and increase their portfolios.

“Given that the private rented sector now makes up 20% of the housing market, it is vital that professional landlords are incentivised to continue providing good quality affordable housing to those who need it. This appears to be achieving quite the reverse.

“Landlords looking to add new properties to their portfolios need to be conscious of the new requirements. We suggest talking to your mortgage broker or bank before committing to any new property.”

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  • Tony Gimple

    Looking at our experiences, the biggest single factor effecting how much landlords can borrow is the reduction of disposable income directly brought about by having to pay significantly more tax. We've seen some tax bills increase by as much as 50%!

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    • 21 March 2018 10:04 AM

    The government is out of control.

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    They tried increasing taxes on landlords in Ireland also. They are retreating from this now as we have a serious housing crisis. Lots of landlords have sold as a result ; same as U.K.

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    There was a housing crisis before Clause 24. It may be convenient to try finding a causal link between the two but I doubt it's there.
    The obvious way to ease a shortage of housing would be to build more houses. Who owns the existing stock, landlords or owner occupiers, is really neither here nor there.

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    The housing crisis in the U.K. will be far worse than Ireland as s24 is far harsher than their version and it wasn’t retrospective. The U.K. will wake up to this but it will probably be covered up by this discusting farce of a government.


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