Barclays Bank has announced it will increase its lending affordability criteria for buy to let borrowers, ahead of tax changes that will make property a less attractive investment for investors.
BTL borrowers feel the squeeze as Barclays increases lending restrictions
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Barclays Bank has announced it will increase its lending affordability criteria for buy to let borrowers, ahead of tax changes that will make property a less attractive investment for investors. From 7 December, borrowers will need to show that rental income from their properties is at least 135% of their mortgage costs, an increase from 125%, according to a note from Barclays to mortgage brokers, according to reports in FTadviser, a website for intermediaries. This is to ensure landlords’ mortgages remain affordable when tax relief is phased out for landlords over the coming years. Landlords will see their costs rise in April 2016, when the rules change regarding maintenance relief. Currently, landlords can claim 10% of their rental income, but from next year they will only be able to claim for their actual expenses. Tax relief on mortgage interest is being tapered off from April 2017. Currently, investors can claim income tax relief on their interest payments, but in future they will only be able to claim basic-rate relief, i.e. 20%. On 1 December, the Bank of England’s governor, Mark Carney, welcomed plans for the financial regulator to review underwriting standards amongst buy to let investors as the Bank’s latest Financial Stability Report found defaults on buy-to-let properties are twice as high as for owner-occupier mortgages. Barclays has not responded to request for comment at the time of writing.
Source Moneywise http://ift.tt/21uucTu
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