Landlord Voice Magazine November 2015 - Edinburgh | Page 8

Photo: Bank of England Governor Mark Carney

BUY-TO-LET MORTGAGES

COULD BE SCALED BACK
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8 | LandlordVoice | November 2015

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P

eople hoping to become
landlords may find it
increasingly harder to secure
a buy-to-let mortgage if the
Treasury acts on the advice
of Bank of England Governor
Mark Carney to constrain
them.

According to the
Council of Mortgage Lenders
almost 40 per cent more buyto-let mortgages were granted
in August this year compared
with the same period last
year.

Mr Carney has warned
that the surge in availability
of buy-to-let mortgages
and consequent growth in
debt poses a risk to the UK’s
economic recovery.

Buy-to-let mortgages
now account for a sixth of
the market and banks are

Buy-to-let mortgage
lending has increased
by more than 40% since
the 2008 banking crisis,
while owner-occupied
lending has increased
by just 2% over the
same period.
currently prohibited from
allowing more than 15 per
cent of residential mortgages
to be agreed for those
borrowing more than 4.5
times their income.

It is understood similar
guidelines may be introduced
in order to restrain buy-to-let
mortgages.

So, for landlords looking
to buy property in the southeast then this is indeed bad

news but for those looking
to buy in other parts of the
country such as Nottingham,
where three-bedroom houses
sell for £130,000 or less, a
buy-to-let mortgage would
still be possible under the new
guidelines.

The calculation set out
below shows that the average
UK salary earner would still
be able to secure a buy-to-let
mortgage on a house worth
£130,000 without having to
borrow more than four times
their salary.
• House price = £130,000
• Average UK salary (ONS) =
£26,500
• Deposit of 25 per cent =
£32,500
• Amount borrowed =
£97,000
November 2015 | LandlordVoice | 9