Is the buy-to-let boom about to bust?
Landlords, or those hoping to to become landlords, are finding it harder to secure buy-to-let loans due to new and stricter affordability tests, according to the Guardian.
However, this news is based on a drop from £2.9bn lent last year by Nationwide’s buy-to-let subsidiary, the Mortgage Works, to £2.8bn in the same period this year, so there is not a huge fall when looking at the percentage.
Even though Nationwide blamed this fall on the new affordability tests brought in before tax relief changes starting next April, it is still unclear whether this is just a small blip, or if we will continue to see a fall in the number of buy-to-let mortgages.
Last April, Nationwide made it more difficult to secure a buy-to-let mortgage when they started to only let people borrow up to 75% of a property’s value, instead of the previous 80%, and requiring that rental income now had to be at least 145% (up from 125%) of the mortgage repayment.
Nationwide are not predicting a collapse caused by Brexit uncertainty. Far from it, in fact. They have predicted a 3-6% rise in house prices over the next year because, while demand might fall slightly due to an uncertain economy, low interest rates and a limited supply of new homes will keep prices up.
What about London?
London, as a place with higher than average properties, has seen buy-to-let properties become very expensive due to the new affordability tests.
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