RLA News Service

Increasingly stringent rules governing buy-to-let mortgages may make it even more difficult for British landlords to prosper during the current recession and meltdown in the housing sales market. One of the United Kingdom’s largest providers of mortgages, Mortgage Works, has decided that landlords would have to meet new requirements if they wish to re-mortgage their real estate and for property development firms seeking new loans. Only those applicants who own less than 25 percent of any property development company registered in the UK will be eligible to apply for mortgages starting in the New Year.

Abbey, another major mortgage provider in the UK, has also decided that it would enforce stricter lending rules for owners of residential properties who wish to rent out their house or flat in these difficult economic times. The only way that these owners will be able to become landlords is if they can prove to the mortgage provider that any rental income gained would amount to at least 125 percent of the monthly loan repayments. Melanie Bien of Savills Private Finance categorized these new rules as “draconian” and suggested that these regulations may turn away responsible homeowners and landlords from doing business with such firms. “Abbey is sending out a clear message that landlords are no longer welcome,” Bien observed.

Over the past several months, an ever growing number of homeowners in Britain have decided to rent their flats and houses, rather than sell them, in the hope that by waiting a couple of years, the housing sales market might recover.

Thank you to Beacon Financial for the initial report.