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One in three landlords still unaware of new BTL mortgage rules

Around a third of buy-to-let investors are still unaware of how regulatory changes could impact their ability to borrow or refinance their property, according to a new survey.

New buy-to-let mortgage rules were introduced in September 2017, which make it tougher for landlords with four or more mortgaged properties to borrow money.

But the study, undertaken by Shawbrook Bank, found that more than a quarter -28% - of the brokers surveyed said their clients were completely unaware of these rule changes, which are designed to reduce irresponsible lending and make buy-to-let mortgage and lending requirements tighter.

A further 61% of respondents reported that their clients were aware of these changes, but lacked sufficient understanding of them.

The rules were introduced by the Bank of England’s Prudential Regulation Authority, and also include the interest rates-dependent ‘stress test’ on new mortgage applications.

Lenders need to review a landlord’s entire property portfolio when making a decision on their single property application, which has had an adverse impact on multi-property landlords, especially those operating on tight profit margins.

Under the rules introduced in September 2017 by the Prudential Regulation Authority, landlords with four or more properties are classed as portfolio investors.

Karen Bennett, managing director of commercial mortgages at Shawbrook Bank, said: “This survey highlights the critical need for more education in the investor market regarding the impacts of regulatory change.

“The benefits of increased awareness are two-fold. Firstly it should help prevent clients from sleepwalking into a problem and allow them to adjust their investment strategy accordingly.

“Secondly, according to our research, brokers are also seeing increased enquiries from landlords which demonstrates that there are still opportunities for business growth.”

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