According to recent research, more than half buy-to-let mortgage applicants are unaware of the impending changes to mortgage law, particularly those dubbed ‘accidental landlords’, meaning those who did not set out intentionally to let a property.
The research also found that more than 62 per cent of applicants were unaware of either the changes to mortgage tax relief or the EU’s Mortgage Credit Directive (MCD), which means that they won’t know of changes that could impact on their ability to secure a mortgage.
This lack of awareness rises to 71 per cent amongst the ‘accidental landlord’ cohort, who rent out property because they have been unable to sell or inherited it. These landlords now account for 17 per cent of new mortgage applicants, adding to the number of overall buy-to-let mortgage applications, which grew by 29 per cent over the past year.
The research also revealed that only 7 per cent of mortgage advisers believe that the MCD will have a positive impact on approvals of buy-to-let applications, as opposed to the 55 per cent who expect it to have a negative impact.
It is likely that the new EU legislation on mortgages, in addition to the Government’s increase in buy-to-let taxation, could significantly alter the market and ‘accidental landlords’ with one or two rental properties could find that they don’t qualify for mortgages as they had in the past.
In addition, those landlords who prefer not to use agents, in a bid to save money, should ensure that they keep up to date with legislation to ensure that any property they let complies with legislative changes.