Update: It’s been several weeks since the PRA changes came in to play, and lenders and brokers alike have started to confirm how they have decided to adapt.
Some major lenders have stated they will make minimal changes. Barclays and Paragon, for example, have promised to continue without significant shifts in their attitudes; Barclays will ask borrowers to fill out an extra form to provide information, whilst Paragon has already implemented these changes well in advance and is prepared to handle applications from portfolio landlords.
The Mortgage Works (Nationwide) and BM Solutions (Lloyds) will both require 145% interest cover ratio, with The Mortgage Works offering a new online application system and a dedicated team for brokers, whilst BM Solutions have launched a new underwriting system. Meanwhile, Accord will ask for 145% interest cover ratio, whilst Coventry Building Society will ask for 125% with a maximum 65% loan to value (LTV) ratio across the portfolio.
Some lenders, however, have chosen to withdraw their offering for portfolio landlords either partially or fully. Santander will offer no further borrowing for portfolio landlords who want to increase their lending, whilst Platform (Co-Operative) will offer no lending for portfolio landlords at all.
However, we at Enness still have access to every lender in the market offering mortgages for portfolio landlords—so if you’d like more advice about the best possible mortgage deal for your portfolio, don’t hesitate to get in touch.
It’s been a challenging year for buy to let landlords. With changes in buy to let mortgage tax relief and affordability stress testing, it’s little wonder buy to let purchases have fallen by almost 50%. Many of those deterred from securing a mortgage for buy to let properties would have been amateur landlords, such as those purchasing a buy to let to generate additional income. For portfolio landlords, there have been more changes in recent months.
The Prudential Regulation Authority (PRA) has introduced stricter underwriting standards for landlords with more than four mortgaged properties. If you’d like a further overview of the effect these changes will have on landlords, check out our analysis here.
However, borrowers aren’t the only group who have been affected by this. Tougher underwriting standards mean lenders now need more information during the application process. Although some lenders are using external software to deal with the extra admin, other lenders have indicated they will pass this work on to buy to let brokers.
This will have a knock-on effect on the amount of work brokers are able to do, and the speed at which they can resolve cases. Different lenders have different policies—and brokers will now be expected to work across these policies, with a solid understanding of each. Going forward, this could place a huge time pressure on brokers, increasing how long a mortgage for buy to let properties takes. This may even lead some brokers to withdraw from buy to let broking.
At Enness, we retain our commitment to providing unparalleled levels of customer service—but there’s no denying the PRA changes have made working on portfolio landlord mortgage applications more challenging.
If possible, I would advise landlords who are considering remortgaging to contact us as soon as possible to discuss your options. Buy to let remortgage transactions have risen over the last few months; interest rates are currently very low, so landlords have been motivated by both cheap borrowing and the prospect of a more difficult application process. The sooner we begin a discussion, the sooner we can begin to find you a suitable solution.