New rules for buy-to-let mortgages are making it harder for many landlords to secure a loan for property, claims a key industry body.
The National Landlords Association (NLA) believes the changes introduced by the Prudential Regulatory Authority (PRA) means some landlords are struggling to meet the new criteria.
Under the changes, lenders apply an interest cover rate to all products and tougher stress tests for all buy-to-let mortgages - often meaning rental income needs to cover 125 per cent of mortgage repayments.
Research from the NLA shows 63 per cent of landlords are aware of the changes making it harder to be granted a mortgage, with this rising to 70 per cent amongst landlords with more than four buy-to-let mortgages.
A total of 48 per cent of landlords feel the PRA changes have slowed down the process and 46 per cent believe there has been a reduction of mortgage products available as a result.
“These findings show that the PRA’s changes seem to be greatly affecting the ability of landlords to find new finance and increase their portfolios,” said Richard Lambert, chief executive officer of the NLA.
“Given that the private rented sector now makes up 20 per cent of the housing market, it is vital that professional landlords are incentivised to continue providing good quality affordable housing to those who need it. This appears to be achieving quite the reverse.”