The Bank of England tightens the requirements for investors

Some investors in UK real estate “buy to let” faced with more stringent mortgage regulation, when applied for a loan to expand his portfolio.

The Bank of England recently announced that the sector “buy to let” ( buy to rent) are distributed with weak standards and recommended banks to tighten them.

Homeowners with 4 or more number of properties in ownership when applying for additional credit will be recommended to declare how much income they expect to see from their property, and what is their additional source of revenue and standard expenditures, that is, to simulate their future finances. In addition, landlords must prove that they will be able to pay the mortgage even if the property fails to rent, or dramatically grow the interest rate. Additional risk banks consider raising taxes, which will pay the investor at delivery of property in rent next year.

The Financial Security Committee of the Bank of England believes that in connection with deterioration of conditions for investors in the market of real estate in the UK, needed more stringent regulation to eliminate financial risks for banks and investors.

An illustrative example is Dubai, when excessive lending investors led to a global collapse in the property market, after there was a falling energy prices and the number of paying tenants in Dubai fell sharply. Additional tighter regulation for credit to investors in London will ensure the sustainability market the London property and security for the financial status of homeowners.

David Cox, head of the Association of Residential Property in the UK, believes that the market for rental housing is clamped too close to the frame. At that time, as we want to ensure market availability, over-regulation, which manifests itself in the form of several hard measures may lead to the fact that the balance of supply and demand will worsen and we will see a global slowdown in the housing market.

® Helen G. Antre 30.03.2016

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