PRA rules see falling number of BTL products in January


Neil Patterson - Published on 10/01/2017
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This month the total number of Buy to Let products available using Moneyfacts data has fallen to 1,408 down from 1,482.trolley

This is not statistically a huge percentage, but is a significant change in direction from the previous steady rise post credit crisis.

The majority of withdrawn products were in the 75% maximum loan to value range which is likely to be attributed to the tougher new stress testing rules introduced by the PRA this month.

Any Buy to Let products not fixed for five years or more now need to be stress tested at a minimum of 145% interest cover and 5.5% notional rate. This will make it much harder in lower yield areas for the rent to cover the affordability stress testing at higher loan to values.

Moneyfacts finance expert, Charlotte Nelson said, “the Buy to Let mortgage market took a hit last month, seeing the largest reduction in product numbers since March 2009. Usually, the month of December is quiet, with providers gearing up for the holidays. This time, however, the BTL market has seen a surge of activity, with the number of BTL products falling back to July 2016’s levels. Withdrawals have not been limited to just a few providers, either, with the reductions having been spread across the board.

“Alongside tougher affordability, major changes to the way in which income from property rentals is taxed will be coming in April. Lenders are perhaps withdrawing products to get back to just their ‘core’ range in an attempt to wait and see what other providers will be doing in the run up to April.

“2017 is set to be an uncertain year, which could be a lethal cocktail for landlords, particularly now there are less products on the market. Anyone unsure about their options should seek out a financial adviser.”

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