New legislation around buy-to-let mortgages is set to come into force on 1 October. Here’s everything landlords need to know to prepare for the changes.
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New rules from the Bank of England
From 1 October, landlords who own four or more properties will need to provide information on all the properties in their portfolio to lenders, even if the mortgage will only be for one of them.
The rules, which come from the Bank of England, are designed to target ‘portfolio landlords’, and will apply whether the properties are in your name or owned through a limited company.
Once lenders have your financial information, they will use it to decide whether you’re a good candidate for a loan. Some of the areas they’ll look at are:
- How much equity you have in your properties
- Your total rental income
- Whether your properties are all in one location
These changes will likely mean loans take longer to be considered, as well as creating more admin work for landlords.
What landlords need to do
If you have fewer than four properties, or don’t need to take out a mortgage, then things will go on as they are.
For portfolio landlords who wish to buy a new property or remortgage existing properties, the rules will vary from lender to lender.
Here’s a list of information you’re likely to need:
- Addresses and proof of ownership for all your properties
- Details of any current mortgages
- Proof of rental income, usually bank statements and tenancy agreements
- Evidence of any other income - tax returns or company accounts
- Business plans and cashflow forecasts
Some lenders may ask for more than this, while others won’t need this much, so it’s worth checking with your particular lender what you need to provide in advance.