Update on the PRA's new underwriting rules for portfolio landlords

The next raft of PRA (Prudential Regulation Authority) or Painfully Robust Administration changes are almost upon us as Chris Longhurst, consultant mortgage broker, explains.

In a flash October will be here and the specialist approach to underwriting that lenders must adopt on buy to let mortgage applications from portfolio landlords will be live.

After a slow start a good number of lenders have now offered at least an initial position on their stance going forward. To summarise, the more commercially minded lenders are essentially saying 'no change' as they have always underwritten cases in this way. Those more vanilla lenders, generally with the keenest pricing, are separating the two parts; those with three or fewer mortgaged properties should find the process more streamlined whilst those with four or more can expect the same information overload as the other lenders.

If there is one message to offer at this stage it is that every application form will need to be both accurate and fully completed. Early indications are that the information provided will be thoroughly analysed:

• Portfolio schedules will be reviewed, probably with the help of automated valuation systems
• All outstanding mortgages will need to be found on credit searches or annual lender statements provided
• Rentals and monthly payments will be checked against bank statements
• Evidence of rental income - and all other sources of income for that matter - will need to be reflected on tax returns

Phew! Oh no wait...

• Business plans and cash flow forecasts will have to be produced.

These aren't necessarily difficult to do but they will take additional preparation time - and that's another blog!!

The more accurate we can make the initial approach to the lender the better the likely outcome but do be prepared for delays whilst all this additional information is being processed. I suspect the services of a knowledgeable broker will never be more welcome and we are fortunate enough to have a few here!

 

SIGN UP TO OUR WEEKLY NEWSLETTER

You may also be interested in:

Portfolio Landlords' Checklist
Steve Olejnik describes what lenders are likely to require from portfolio landlord borrowers after the implementing the next phase of PRA guidelines.
Read

How Aldermore will underwrite portfolio landlords
As of 1st October 2017 lenders will need to implement a more thorough underwriting process when considering mortgage applications from portfolio landlords, i.e. where the borrower has, or will have more than four mortgaged residential buy to let properties.
Read

The Mortgage Works & Paragon break silence on lending to portfolio landlords
Chris Longhurst describes how these lenders will meet new PRA requirements
Read

Accord prepares for PRA changes while Leeds and Yorkshire cut mortgage rates
Ahead of the PRA's new underwriting standards, which come into effect in September, Accord has announced the details of its new lending criteria for portfolio landlords
Read

15th August 2017