First it was the alteration on claiming tax relief on buy-to-let mortgages.  Next it was the Stamp Duty Land Tax surcharge on all but a first residential property purchase.  Finally, well until the next great new idea, it was higher stress levels for the borrowing limit against the rental income.  For once the new EU regulations which came into force on 21st March appeared to be so insignificant as to hardly cause a ripple!

So what has been the reaction so far?  Some landlords will doubtless off-load some of their properties but not so quickly as to deflate prices.  Existing and prospective landlords are being more careful on their purchases, looking at better yields; although most take the view that in the long term the 3% SDLT surcharge is insignificant.  On the other hand, to achieve those better yields, HMO’s (houses in multiple occupation) are now in high demand and, of course, many more applications are being made in limited company names.  At last, most people are thinking hard about how to make money out of letting property rather than buying houses on a whim.

Lenders have reacted, too.  We have commented before that new lenders have been coming into the buy-to-let market throughout 2015: they keep coming.  Pepper, Foundation, Fleet among others and the Mortgage Lender next, with doubtless more to follow.  To win market share the newcomers have taken different attitudes towards the age of borrowers, types of security and applicants’ situations.  So while the authorities are making life harder for ‘standard’ borrowers and situations, lenders are making life easier for ‘non-standard’ cases!

All this makes planning difficult for landlords or prospective landlords looking for finance and the number of mortgages (both buy-to-let and residential) going via brokers rather than direct to lenders has risen from around 60% to 80%.  Indeed, most of the new lenders only accept applications via brokers.

Another feature of the new lenders is that they have very restricted legal panels so applicants either use the lender’s solicitor for a purchase or involve their own solicitor who liaises with the lender’s (costing more time and money).

A benefit of the concentrated solicitors’ panel is that these firms develop an expertise in the buy-to-let market. One of them has produced a guide to the current maze of decision making on residential investment property and we can send you a copy on request.