Buy to Let

Rule change could cause rental supply surge

New research suggests that there may a surge in rental stock returning to the market this month after the new lending rules come into effect.

According to estate agent Portico, the changes to be introduced on 30 September are likely to result in landlords selling some of their properties in order to increase lending on the ones which may provide a greater return.

The new rules being imposed by the Prudential Regulation Authority will require landlords with four properties or more to set out their business plan, cash flow forecast as well as their full portfolio in order to apply for a new property.

In order to decide which mortgage deal they are able to offer on a single buy-to-let property, the lender will now need to assess the landlord’s entire portfolio when they make an application.

Commenting on the potential surge in rental supply was Mark Lawrinson. The regional director of Portico stated: “As a result of the new buy-to-let lending changes, we may see a surge of rental stock come back on the market for sale as landlords look to offload their weakest performing properties in order to get further lending on more potentially profitable properties.

“The new rules could also have a knock-on effect on rental prices, as landlords look to cover any shortfalls or carry out works to a property to both increase the capital value and the rent, in turn improving the yield and the return.”

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