Buy-to-let landlords will be restricted to only four properties and a lower £2 million maximum portfolio size.

Virgin Money is putting forward huge changes in their buy-to-let lending system, lowering the limit of buy-to-let properties for landlords from 10 to 4 and minimum property price to increase from £40,000 to £50,000.

This is a severe cut, as well as cutting the maximum loan amount from £3m to £2m in response to the Bank of England’s warning of the threat of buy-to-let on the UK economy.

Previously, Virgin Money had been one of the most competitive lenders for landlords, offering 2 year tracker deals starting a 2.09%.

Virgin still committed to the market

The changes were aimed at their target demographic of amateur landlords, rather than professionals and Virgin Money were not moving away from the buy-to-let market.

The increase to the minimum property price could impact new landlords in the north of England where properties are cheaper and where many may now be excluded.

Virgin Money had one of the lowest limits for property loans with many other providers setting a minimum property value of at least £75,000.

The changes may have a detrimental impact on Virgin Money as the demand from buy-to-let landlords is increasing.

Greater competition from buy-to-let investors has increased the purchase price and reduced the supply of suitable properties for first time buyers or home movers.

Bank of England concerned with buy-to-let market

Earlier this week the Bank of England issued a warning about the rises to the UK economy of allowing buy-to-let landlords easier access  to credit.

They have said the extra money invested in buy-to-let properties could increases house prices and also raise the general level of indebtedness and borrowers are more vulnerable to rising interest rates as loans are mostly interest-only mortgages.

In addition affordability for buy-to-let landlords is tested at lower stressed interest rates than owner-occupied lending, such as first time buyers, home movers and remortgage buyers.

The changes by Virgin Money will have a lower impact on the richer landlords who are the most significant cause of the Bank of England warning.

It is the smaller, lower income landlords trying to break into the property ladder that will be affected, being unable to get loans on low-value property and only being able to receive loans on up to four properties.

Older landlords with considerable value in their property, allows the equity release buyer to access cash using a lifetime mortgage without any evidence of earnings.

What are your next steps?

Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything such as improve your quality of life, pay for care at home or gift to a family member.

Learn more by using the mortgage monthly cost calculator, property value tracker chart and equity release calculator. Start with a free mortgage quote or call us and we can take your details.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.