In his summer Budget the Chancellor, George Osborne, announced a huge change for the buy-to-let industry – a cut to buy-to-let tax relief.
While the specific details of how the cut will work is yet to be revealed, what is certain is this will make buy to let less attractive for many investors and the impact of that could be significant. Mortgage interest being fully tax deductible has been one of the key attractions of buy to let since its creation. To make such a huge change without consulting the industry seems wrong to me and I’m not sure the government understand the impact this will have.
In other news, Virgin Money has made some big changes to its buy-to-let offering. The maximum number of buy-to-let properties a landlord can have with Virgin Money is now four while the maximum exposure is £2m. Virgin has also increased its minimum property value from £40,000 to £50,000.
Elsewhere, Clydesdale has announced it is launching back into the 75% LTV space, which is great news for the industry.
TSB has changed its minimum income required. This figure now stands at £25,000 while Kensington has announced its rental calculation is to come down to 125% @ 5.5% from 125% @ 6%.
Interestingly Kensington has also removed its minimum income requirements for experienced landlords. This is a very positive move. As regular readers will know it is a particular bugbear of mine that lenders put so much focus on income within the buy-to-let arena. Kensington’s move shows it is a lender which genuinely understands the market.
Ying Tan is managing director of the Buy to Let Club, part of the Buy to Let Business