majority of property investors not aware of new BTL rules
62% of property investors revealed they were not aware of the introduction of the new PRA rules, MT Finance’s Q3 Property Investor Survey showed.
The new buy-to-let rules from the Prudential Regulation Authority (PRA), which is part of the Bank of England (BoE), demand a tougher lending stance on landlords. As of 1st October, landlords with four or more mortgaged buy-to-let properties, will now have to provide information to the new lender on every property in their portfolio when applying for a buy-to-let mortgage- even if the mortgage application is for just one of them.
Under the new guidelines, lenders will have to take a landlord’s experience, their full portfolio, their rental income, any outstanding mortgages and their assets and liabilities into account. This will mean borrowers will see significant delays because of greater volume of documentation required and elongated underwriting processes. It may also mean that some landlords are turned down for finance because they don’t have enough equity in their whole portfolio. This can severely hinder those requiring fast access to funds.
31% of property investors surveyed believe they will be negatively affected by these new rules, whilst 10% are unsure.
Over half of property investors surveyed are not sure if the new rules will mean they have to sell their investment assets as a result of the new rules.
When asked what is the biggest challenge currently facing them, the majority (28%) cited accessing funding as the biggest challenge, followed by the tax changes at 26%.
We know the new rules may cause some volatility to the market but the positive news is that it is absolutely business as usual here at MT Finance. Our bridging loans do not fall under the remit of the tougher landlord affordability rules. Whether you’re a first-time investor or a portfolio landlord, as a non-status lender, we can continue to be flexible in our approach by providing fast and affordable specialist finance, for terms as long as 24 months.
Bridging finance can present a real-time funding solution to property investors facing the growing number of barriers and restrictions, by gifting them the ability to buy quickly when opportunities arise. It has become the perfect tool for borrowers purchasing buy-to-let investments, particularly in a rundown state, and making the necessary refurbishments, before putting them on the open market for sale.
As an example, MT Finance was approached by an investor who required a bridging loan on an investment property in Covent Garden, which had an open market value of £950,000. He wanted to redeem an existing first charge with his mortgage lender and then refurbish the property before putting it up for sale. We provided a £672,000 bridging loan secured by way of a first charge, enabling the client to clear his mortgage and use the remaining funds to remove a partitioning wall and false ceiling to open up the property. Once the refurbishment works are complete, the investment property is estimated to fetch a price in the region of £1.4m, so the client will be able to move on to his next project with a substantial profit.
MT Finance remain committed to supporting property investors and is maintaining in full our existing suite of bridging loan products and pricing. We are still able to make lending decisions within hours of initial enquiry and release funds in less than a week, preventing landlords from missing out on time-sensitive opportunities that come their way.
What’s more, as a non-status lender, we don’t require evidence of credit history, accounts, proof of income or personal guarantees. Instead, we look at the property and listen to the rationale behind a loan when making a decision.
Criteria highlights:
- Loans from £100k -£5m
- Commercial, semi-commercial and residential property
- Up to 70% LTV
- Terms from 3-24 months
- No Early Repayment Charges, no exit fees
- No credit scoring
- No personal guarantees required
If you have any questions or require further information, please do not hesitate to give us a call on 0203 051 2331. The team are on hand to discuss any enquiries you may have. Alternatively, you can email us at enquiries@mt-finance.com