Bank of England proposes new limits for "buy-to-let" landlords

2016-03-29T13:00:00-04:00

Buy-to-let landlords should face new limits on the amount they can borrow, the Bank of England has proposed. It suggested that lenders should be much stricter when deciding whether or not to grant landlords a mortgage. Instead of just taking their rental income into account, the Bank wants lenders to look at their wider financial situation as well. If adopted, the new rules could reduce lending to landlords by up to 20% over the next three years.

According to the Prudential Regulation Authority (PRA), the newly-proposed standards should "curtail inappropriate lending, and the potential for excessive credit losses."

The new strictures would take into account the costs a landlord accrues in order to rent a property, tax liabilities associated with the property, a landlord's "personal tax liabilities, 'essential expenditure' and living costs," and, in cases where it supports the loan, a landlord's extra income.

For more on the real estate landscape of the UK, check out some past Archinect coverage:

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Bank of England proposes new limits for "buy-to-let" landlords