The buy-to-let property market has been a popular investment choice for many landlords in the UK. However, recent reports have revealed that over one-third of landlords are struggling to remortgage their buy-to-let properties. This is due to a number of factors, including stricter lending criteria and the increasing cost of borrowing.
The Bank of England’s Prudential Regulation Authority (PRA) has imposed stricter lending criteria on buy-to-let mortgages. This means that landlords must now prove that their rental income will cover the mortgage payments by at least 145%. This is a much higher threshold than before and makes it more difficult for landlords to remortgage their properties.
In addition, the cost of borrowing has increased significantly in recent years. The average interest rate for buy-to-let mortgages has risen from 3.5% in 2015 to 4.3% in 2019. This increase in borrowing costs has made it more difficult for landlords to remortgage their properties as they may not be able to afford the higher payments.
The combination of stricter lending criteria and increased borrowing costs has made it more difficult for landlords to remortgage their buy-to-let properties. This has had a negative impact on the buy-to-let market as landlords are unable to take advantage of lower interest rates or switch lenders.
The situation is further compounded by the fact that many landlords are unable to access the government’s Help to Buy scheme. This scheme was designed to help first-time buyers get on the property ladder but it is not available to landlords. This means that landlords are unable to benefit from the scheme’s lower interest rates and other incentives.
Overall, it is clear that over one-third of landlords are struggling to remortgage their buy-to-let properties due to stricter lending criteria and increased borrowing costs. This has had a negative impact on the buy-to-let market as landlords are unable to take advantage of lower interest rates or switch lenders. Furthermore, many landlords are unable to access the government’s Help to Buy scheme which could help them to reduce their borrowing costs. It is therefore important that the government takes action to address this issue and make it easier for landlords to remortgage their properties.