Virgin Money is to cut the number of buy-to-let properties it will lend on and reduce the maximum a landlord can borrow to finance a portfolio.
From 8 July the lender will allow landlords to borrow to finance only as many as four buy-to-let properties – the previous limit was 10. And the maximum it will lend to a landlord will be cut from £3m to £2m, while the minimum property price it will lend on will rise by £10,000 to £50,000.
The announcement comes a day after the Bank of England warned that increased buy-to-let lending could be a threat to financial stability, and follows a steady rise in the proportion of the mortgage market given to investors.
Virgin Money has been offering some of the most competitive deals to landlords, with a two-year tracker deal starting at just 2.09% among its range.
A spokesman for Virgin Money said the changes were designed to bring it in line with its “core customers” who were amateur landlords, rather than professionals, and that it was “still absolutely committed to the buy-to-let market”.
Daniel Bailey, who runs mortgage brokers Middleton Finance, said the changes could have an impact on landlords trying to build a portfolio “at the lower end of the property market”.
“Not many lenders will lend on a property value of £50,000 as the majority of lenders’ minimum property valuation tends to be £75,000. As a broker in the north I do see lending at that level,” he said.
“Demand for buy-to-let lending is very strong at the moment and I think we will see other lenders regularly reviewing their criteria. Lenders will not want to get overexposed in one particular area.”
