Budget 2018: BTL lender concerns over Universal Credit rollout

  • 30/10/2018
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Budget 2018: BTL lender concerns over Universal Credit rollout
The buy-to-let (BTL) industry has welcomed yesterday’s quieter Budget, noting that an absence of major changes will give time to continue absorbing the spate of tax and regulation changes.


However, warnings were raised about the ongoing impact of those changes and the potential for the continued rollout of Universal Credit to hit lenders.

Phil Rickards, head of BM Solutions, (pictured) said: “Given the transformation that the buy-to-let sector has gone through in recent years, no further major changes being announced will help the industry continue to bed in the latest changes.

“The tax treatment changes have clearly had an impact on the BTL market itself – the way that landlords may view their existing portfolios and whether they choose to add to these portfolios now or into the future.

“All of that said, it is vital that the real impact of these changes is fully understood, and that the possibility of appropriate action shouldn’t be ruled out to support the supply of much needed quality housing to the private rental sector.”


Universal Credit concerns for lenders

The treatment of tenants receiving government benefits has hit the mortgage market this month after Mortgage Solutions’ exclusive article which revealed NatWest had told a landlord to evict a vulnerable tenant on benefits or pay £2,500 in early repayment charges.

NatWest has since pledged to review its policy, but a wider campaign has been built urging lenders to remove these restrictions altogether.

Magellan Homeloans managing director Simon Read noted that the continued rollout of Universal Credit (UC) could prove confusing to buy-to-let lenders.

“Some lenders, like Magellan, accept certain benefits as income on residential applications and state-supported tenants on buy to let,” he said.

“Currently, it’s clear which benefits a recipient is getting and whether these are acceptable to a lender.

“Once benefits are rolled under the one universal banner, it will be more difficult to determine which benefits are being received and there is a danger that potential borrowers could be unduly turned down.

“In their deliberations over the introduction of UC, it would be useful if the government kept in mind how the benefits may be viewed by companies and suppliers so as not to penalise recipients.”


Continue to feel the squeeze

Some of these concerns affecting the landlord market were echoed by Maxim Cohen, chief executive of The UK Adviser broker franchise, who added there had been no hoped-for rollback or easing of tax changes.

“There is no reprieve for landlords who continue to feel the squeeze following stamp duty surcharges and the removal of lettings relief on capital gains tax – this will discourage landlords that rely on mortgage facilities,” he said.

“However, it is the tenants that will ultimately lose out, as landlords are forced to stall on plans to increase their portfolios.

“The rental market continues to grow at pace, and fewer landlords means those that rent have fewer options.”

He added that in one bright spot, the withdrawal of some landlords would assist first-time buyers.



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