You are here: Home - News -

Buy-to-let changes ‘will hit students’

by: Heather Greig-Smith
  • 16/03/2017
  • 0
Buy-to-let changes ‘will hit students’
The rising costs of buy to let risk a student rental crisis, according to online lettings platform StudentTenant.com.

It said the Bank of England’s tough new banking regulation rules for all buy-to-let lenders, will have a knock on effect on students.

The changes mean that lenders require buy-to-let landlords to prove that they can cover their mortgage payments by 145% if their mortgage rate went up to 5.5%, in many cases. The change is a significant jump from the previous 125% coverage required.

StudentTenant.com said this will force new landlords to increase rental prices to be able to afford the changes. From next month, existing rules which allow landlords to offset mortgage interest against tax will also be phased out, restricting the amount of mortgage interest landlords can offset against tax on property investments.

Danielle Cullen, managing director at StudentTenant.com, said: “These changes risk students in the UK being put on the verge of a severe rental crisis. Not only are we going to see a hike in rental costs for students to offset the change in buy-to-let mortgage rates, we’re also going to see a huge fall in mortgage applications as it’s just not a worthwhile investment anymore.”

She said government is gradually pricing out new student landlords from the rental market, causing huge problems with the very limited supply already seen in certain areas.

Cullen added: “Unfortunately, it’s another costly setback for students who will have no choice but to pay the increased rental costs. There’s already huge pressure on students to cover the costs of bills, pay rent and enjoy their university experience whilst studying, and another increase in rental costs is adding more pressure.

“With the hike in university fees, lower maintenance loans and now the impact of the buy-to-let mortgage changes, it’s no wonder students are questioning whether all the debt and stress is really worth paying for higher education.”

There are 2 Comment(s)

You may also be interested in

Bridging

Keep up-to-date with all the breaking bridging and short-term lending news and analysis, from regulatory changes to product innovation and inside market knowledge. Take a look at our broker and lender case studies showing short-term finance in practice.

Commercial

Find all the news, opinion and analysis for property finance brokers specialising in commercial and semi-commercial mortgages, alternative and development finance for commercial investments in residential projects.

Second charge

Stay up-to-date with the latest news, analysis and opinion on the secured loan market as it evolves into a mainstream finance option following European regulation on 21 March 2016.

Complex buy-to-let

Whether it’s a complicated asset or a complex customer, you’ll find out all the breaking buy-to-let news in this section. From limited companies to portfolio landlords, student lets to a House in Multiple Occupation, we’ve got all bases covered with our up-to-the-minute news, analysis and opinion.

Mortgage Solutions

Find all the breaking news, analysis and industry comment on Specialist Lending Solutions' sister site, Mortgage Solutions
Read previous post:
shutterstock_251934586
Letting agents escape money laundering regulation

Letting agents will not be subject to money laundering regulations, the government has said.

Close