Lenders and brokers ‘too quiet’ over PRA Buy to Let changes

Lenders and brokers ‘too quiet’ over PRA Buy to Let changes

15:45 PM, 22nd June 2018, About 5 years ago 6

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Mortgage lenders and brokers have been too quiet over the Prudential Regulatory Authority’s (PRA) changes to buy to let lending, according to the National Landlords Association (NLA).

The NLA says that despite the significant regulatory changes to lending criteria and the application process for portfolio landlords, introduced by the PRA over the last 18 months, more than half 55% were still unaware.

The findings, from the NLA’s Quarterly Landlord Panel, shows that just 8% of landlords said their lender had been in touch about the changes, with 16% saying they had been contacted by their broker.

Almost seven in 10 landlords 68% said neither their lender nor broker had made contact with them about the changes. However, the findings show that brokers and lenders may have concentrated their efforts on larger portfolio landlords, with 26% of portfolio landlords saying their broker had been in touch, and nine per cent saying their lender had made contact.

Richard Lambert, CEO at the NLA said:

“The PRA’s changes will greatly affect the ability of landlords to find new finance and continue to provide good quality affordable housing to those who need it”.

The NLA says that it’s vital landlords are supported through the changes, having issued broad advice earlier in the year urging landlords to contact their mortgage broker or bank before committing to any new property or finance.

“We hope that that the reason such a significant number of landlords haven’t been contacted is because their existing deals are simply not yet close to expiry. However, it’s in lenders’ and brokers’ own interests to speak to landlords about the changes sooner rather than later, otherwise it could mean a missed opportunity in terms of new business.

“If landlords don’t get the right support and information about how the changes will impact their existing loans, then it could mean higher finance costs that many just won’t be able to absorb”.

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Neil Patterson

15:52 PM, 22nd June 2018, About 5 years ago

PRA guidance on affordability stress testing and how portfolio landlords should be assessed is probably not the most scintillating subject for the average landlord! I would guess there is a certain percentage that may have been told, but it went in one ear and out the other.

Mark Alexander - Founder of Property118

19:45 PM, 22nd June 2018, About 5 years ago

My ‘bug bear’ is that they over complicate things. Here’s an example ....

Affordability is now calculated at a minimum 145% interest cover at a notional rate of 5.5%.

You have to be pretty good at maths to work out how much you can borrow ion that basis, and that’s assuming you even understand it!

Why don’t they just say something this ....

As of Jan 2018 the maximum amount you will be able to borrow is 155 X your gross monthly rents.


13:59 PM, 23rd June 2018, About 5 years ago

Reply to the comment left by Mark Alexander at 22/06/2018 - 19:45
True - it is complicated, but it relates to how the requirements were put together in coverage ratio of 125% + 20% for the additional tax. This sits on top of a bank's SVR with a bit of room for rates to increase.

This may equate to 155x but a policy would need to be more precise. Others can interpret it into simpler short-hand forms.

Howard Reuben Cert CII (MP) CeRER

14:49 PM, 23rd June 2018, About 5 years ago

"Mortgage lenders and brokers have been too quiet over the Prudential Regulatory Authority’s (PRA) changes to buy to let lending"


The changes were well publicised, much discussed and I have stood up in front of many property networks and presented the 'new world' (according to the PRA), and so have many other quality BTL specialists too.

The new rules are very much here to stay and we have been offering a free BTL mortgage / portfolio review for well over a year now to existing and new Clients across the UK.

The generic rent stress calculations are a guide, not a stipulated law, and with a daily increasing range of products and new innovative lenders launching all the time too, it is indeed a myriad of confusion.

To determine how much can be borrowed against each BTL property (not just based on rental income but also on age, whether borrowing as an individual or a Ltd Company, on personal tax status, on aggregate LTV across the portfolio etc etc), our Broker Team is available to speak to via my profile link.



16:57 PM, 23rd June 2018, About 5 years ago

Reply to the comment left by http://www.hdconsultants.net at 23/06/2018 - 14:49
While the PRA standards are in themselves less than formal regulations being a 'Supervisory Statement ', they are implemented through PS28/16 which banks do have to follow.

Howard Reuben Cert CII (MP) CeRER

13:36 PM, 25th June 2018, About 5 years ago

Reply to the comment left by H B at 23/06/2018 - 16:57
... however not all Banks are PRA regulated even though they trade in the UK as BTL lenders. This adds to the myriad of complexity surrounding the BTL mortgage market, hence for definitive direction and professional advice and recommendation, a specialist team of expert BTL brokers should be a port of call to provide a robust and best value solution for each mortgage (or portfolio) solution.


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