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Most accidental landlords unaware of coming tax change

New research by landlord insurance provider Direct Line for Businessreveals that more than half (55%) of new buy-to-let mortgage applicants are unaware of the mortgage tax relief changes, with accidental landlords the least likely to be aware of these new regulations.

The survey conducted amongst mortgage brokers across the UK, revealed that nearly two-thirds (62%) of applicants were unaware of either the changes to mortgage tax relief or the EU’s Mortgage Credit Directive (MCD), that means changes which could impact their ability to secure a mortgage. This lack of awareness rises to 71% amongst ‘accidental landlords’, namely those who rent out property due to unforeseen circumstances such as being unable to sell, or inheriting a home.

Mortgage advisers estimate that accidental landlords account for approximately one in six (17%) new mortgage applications, with overall buy-to-let mortgage applications growing by 29% in the past year according to the panel.

The research also revealed that only 7% of mortgage advisers believe that the MCD will have a positive impact on approvals of buy-to-let mortgage applications, compared to 59% who expect it to have a negative impact. 

The EU’s MCD could see circumstances where landlord mortgage lending will be viewed as “consumer” lending and could be subject to more stringent lending criteria.  Accidental landlords with one or two rental properties may not be able to pass the expected new affordability tests. 

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