Back in February our blog included a story about Barclays’ plans to let landlords cover rental shortfalls with personal income. We can now update you on recent developments: the bank has just scrapped its old B2L mortgages to make way for this new approach.
Now, Barclays puts landlords through an affordability assessment to find out whether rental will be met. Where there’s a shortfall, landlords can still potentially get a mortgage if they have enough disposable income to plug the gap. If applications were not completed by July 24th, landlords need to re-submit under this new assessment criteria.
As you’ve probably already heard, the government has clamped down on tax relief on mortgage interest payments for landlords in the latest budget. At the moment wealthy landlords can claim relief of up to 45%, but from April 2017, the limit will gradually come down to 20%. Predictably, it’s caused some strong reactions from experts in property and finance.
If you’re a B2L landlord – or considering a move into property investment – it’s worth reading our summary of opinions and figures we’ve gathered together from recent reports:
- The National Landlords Association claims the change will shift the burden to tenants through an increase in rents.
- Millionaire landlord, Fergus Wilson, offers his thoughts on how this will not solve the housing crisis.
- New PwC research shows that the impact of tax relief reduction will be compounded by the eventual rise in the Bank of England base rate.
- Deloitte has also pitched in, telling The Telegraph:
It’s become widely recognised that since tighter financial regulations came in, triggered by the economic crisis, securing a mortgage has become problematic in general. If you’re self-employed and working as a company director you face even more obstacles when looking for a lender.
No more self-certification
In the days before tighter rules, many self-employed people got self-certification mortgages, where lenders didn’t check their stated income. However, they became known as ‘liar loans’ due to instances of and potential for fraud, and were done away with, dashing the hopes of genuine applicants. A few years on and company directors continue to struggle to get a mortgage, even if they and their businesses are successful.
The great British summertime has finally arrived, bringing with it warmer days. But as our weather and BBQs heat up, mortgage rates continue to fall – even dipping below 1%. This is excellent news for borrowers who plan to spend summer searching for deals.
The Bank of England and the Financial Conduct Authority (FCA) reported that in the first quarter of this year, the average rate was 3.01% – a drop of 0.25% recorded at the end of 2014. Since then however, more lenders have announced much lower rates.