Details of the Bank of England’s statement outlining tougher rules on mortgage lending to buy to let investors have been shown to admit that the three per cent stamp duty surcharge will be a “considerable” burden on landlords.
Last week the BoE’s Prudential Regulation Authority revealed details of how it expected buy to let mortgage lenders to tighten their criteria.
This included taking more of a borrower’s personal and professional taxation and salary elements into consideration, and ‘stress testing’ applicants to see how they would meet mortgage debt – through rent and other means – if interest rates moved up from their current historic lows to a notional level of 5.5 per cent.
Now further analysis of the paperwork sent to individual lenders reveals for the first time some official acknowledgement that the arrival, last April, of the additional stamp duty three per cent surcharge would hit the sector.
In section 2.40 of the PRA’s statement it says: “The PRA also considered the impact that the personal tax changes would have on landlords, and particularly those landlords using their personal income to supplement the rent. For portfolio landlords, who are not set up as limited companies, this additional tax burden will be considerable and so a portfolio view becomes even more relevant for new borrowing.”