Over the last year a number of changes have come into effect that have had a big impact on owners of investment properties and those looking to purchase them. Recent news stories indicate this is not the end of the change. More new rules will come into effect in September 2017 and they may cause problems for people who own portfolios of multiple homes.
The rule change will have an impact on financial institutions as well as prospective buyers. When an investor with a portfolio containing four or more properties applies for a loan to purchase a new property the lender will have to examine it in its entirety to determine whether to lend and at what rate.
The idea behind the rule change is that investors with four or more investment properties in their portfolio are more likely to fall into arrears. There are several reasons for this including the fact that they are typically juggling repayments for several mortgages at once. Additionally the timing of rental payments may be different.
The rule change will help to reduce the problem because it can restrict the size of portfolios. It is also seen as being an effective way to cool down a section of the property market that is overheated. Lenders will have additional protection as a result. This will also extend to investors. With additional changes in tax reliefs in the works limitations on lending and ensuring that portfolios are healthy will help to reduce the number that encounter difficulties.
At Finefair we work hard to support clients who own and are actively seeking investment properties across Havering and other parts of London. We are a highly skilled team and look after portfolios of every size, scale, and value. Clients appreciate the personalised services we offer and our level of professionalism; we make it clear our main focus is on protecting their interests.
The above rule change can create challenges but we are on hand to offer advice to investors. If you have any questions please feel free to get in touch.