Changes coming into effect from 30th September 2017 are presenting a new challenge for Landlords, lenders and advisers. 

What are the changes?

Guidance from the PRA (Prudential Regulation Authority states that from 30th September onwards, landlords with four or more mortgaged buy-to-let rental properties will be considered by lenders to be portfolio landlords.

Due to these changes, the PRA requires that all firms conducting lending to portfolio landlords are to use a specialist underwriting process.

This process will take complex borrowing scenarios into account, and will require the entire portfolio to be underwritten when applying for a new buy-to-let mortgage. Portfolios must also be underwritten, even if the other mortgages are with a different lender. 

In addition, lenders will be required to carry out additional affordability tests on portfolio landlords and request further documentation to support applications.

How should landlords prepare?

The majority of mainstream buy-to-let lenders are yet to confirm their plans, aside from The Mortgage Works who have announced that they are to continue supporting portfolio buy-to-let lending going forwards.

Specialist lenders, who are already experienced in using a similar underwriting approach, have been clarifying their official stance and assessment criteria.

Concerns have been raised by industry commentators that the upcoming rule changes could reduce the availability of loans to portfolio landlords and increase the price of lending, due to a lack of support from larger buy-to-let lenders.

The coming weeks are sure to bring further clarifications, with experts calling for this process to be carried out as quickly as possible. We advise landlords to keep up to date on any announcements regarding portfolio lending.

Depending on your situation, some of these stances may affect your current or future plans.

To find out more on the upcoming PRA changes, contact us to arrange a meeting.

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