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PRA Changes – Portfolio Landlords

PRA Changes – Portfolio Landlords

Changes for “Portfolio Landlords”

The second tranche of rules from the Bank of England (BoE) went live on the 30th September 2017 and surround “Portfolio Landlords”.  Most imagine this type of landlord has tens of properties, but the PRA has set the benchmark at a low level, so if you’re a landlord with just 4 or more Buy to Let properties this will potentially impact your ability to borrow – in short you will undergo a stricter level of underwriting looking at the ‘performance’ of your current portfolio as well as the singular property you are financing.

Background Portfolio Performance

If you’re a current landlord you’ll be aware that historically, buy to let lenders would largely ignore your background buy to let portfolio assuming a self-financing situation and concentrate their underwriting efforts purely on the one purchase or remortgage you were undertaking.

A portfolio landlord is defined as having just 4 or more buy to lets

So historically lenders didn’t scrutinise your overall position, however lenders must now place a much greater emphasis on ensuring your portfolio is performing sufficiently to warrant lending further monies to you.  Post 30th September, it’s not uncommon for lenders to need a full breakdown of your portfolio including collecting accurate data on your property values, rental income, costs and mortgages, as well as understanding any other assets and liabilities and validating your property income.  Business plans are also often required.

 

How can The Buy to Let Broker help?

Well, the first piece of advice we can give you – please don’t assume you can’t expand your portfolio or remortgage for a new rate!  Having said that, it’s never been more true that the input of a specialist broker is needed, much of the mortgage broker population will be the first to admit that they don’t do as many buy to let applications as they used to, and that as a result they simply haven’t kept up with the vast amount of changes in the market and the complexity it now presents.

There has been an enormous polarisation of brokers in this regard.

The first thing we can do is have a look at your portfolio and see how you’ll likely be impacted by the changes, one thing is for certain, despite the complexity lenders are still willing to lend and the Buy to Let Broker are very well placed to help with standard or complex enquiries.

Dream Big, Stay Grounded

If you are looking to expand your property portfolio further, get in touch to get the absolute best advice for your mortgage. You can call us on 0333 060 7669 or complete the contact form below.

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