Portfolio Landlord exploitation?

Portfolio Landlord exploitation?

11:13 AM, 7th June 2021, About 3 years ago 22

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I have come to the end of my 5 years fixed mortgage product. At the time of taking the Mortgage, there was no such definition of Portfolio or Non-Portfolio Landlord (the one who owns more than 4 properties). I simply decided to switch product with the same lender and I own exactly the same number of properties as I did 5 years ago.

When questioned by the lender, if I currently owned more than 4 properties, to which I answered “Yes”. The product which I fancied from their list was no longer available as they stated that, as a Portfolio Landlord, this product was not available, and they offered a product which was 1% higher than my choice.

My concern is that I did not ask for more borrowing there was no credit search as it was a simple product switch. How lenders can justify an extra 1% and why as a portfolio landlord I am penalised for something which was not applicable at the time of taking a mortgage with them?

As I already have a Mortgage with them, this is not as if there is an extra risk to the lender. In my view lenders are exploiting BTL borrowers because of Prudential Regulation new rules and as a result, my costs have gone up significantly not to mention S24 has already eaten up 20% of our profits.

Any views appreciated.


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12:40 PM, 7th June 2021, About 3 years ago

The whole concept of splitting 'buy to let' and residential mortgages is a similar unecesary set of bureaucracy.

The extra pain, waste of time and extra costs to economy, for what benefit?

Have moved into my rental property in the past, and had to get a new mortgage with all the expense that entails.
Have also rented out my residential property, and told I had to remortgage, as they would only allow 1year consent to let. Again expenses and time for what values.

I suspect most countries don't make this artificial distinction.


13:26 PM, 7th June 2021, About 3 years ago

They are a private business who owe you nothing more than what was agreed in your initial mortgage agreement.

You no doubt apply the same principle to your tenants, i.e. following the fixed term period you have the right to review the rental amount and adjust as you see fit.

Darren Peters

13:33 PM, 7th June 2021, About 3 years ago

Presumably the mortgage is dropping from a special rate onto their standard rate?

How bad is the standard rate?

Have you looked for a better rate elsewhere?

These seem to be your two options.

They can't change the terms of your existing product but can make new deals which you don't like or even withdraw new products.

Simon Hall

15:00 PM, 7th June 2021, About 3 years ago

I suspected I was unlikely to get decent answers either sarcasm or no comprehension. This does not amount to change of terms. This is simply exploiting BTL Landlords on the basis of the fact I OWN more than 4 properties which I did when I took Mortgage with them. (They are relying on new rules from Prudential Regulation) which should not matter as I already have Mortgage with them and I am not changing anything.
There is NO further underwriting, NO new application. NO Further risk to the lender.
Why higher interest rate? Although to new lending/new application it can be justified as lender is underwriting whole portfolio as opposed to single property but in my case....IT IS SIMPLE SWITCH!


15:49 PM, 7th June 2021, About 3 years ago

It is bank profiteering pure and simple and landlords are again the butt of the joke. The days of tieing in straight forward fair interest rate margins over base rates for the mortgage term are long gone. It beggars belief that 4% + interest rate margins are now required by banks, plus they demand huge product fees and massive ERC's to escape your current deal, thus forcing loyal customers to accept unfavourable product switch rates. If you follow the path of Ltd Co mortgages the situation reflects a further 1% hit on margins payable by customers. This is the sad reality of acquiring debt today.

Old Mrs Landlord

16:38 PM, 7th June 2021, About 3 years ago

Reply to the comment left by Simon Hall at 07/06/2021 - 15:00This new rate for a new mortgage is not, as you state, because you OWN more than four properties. It is because you are indebted to the owners of the properties, who are your lenders.You only own the proportion of the properties you paid as initial deposit plus any capital appreciation which has accrued since purchase (unless you have repayment mortgages). If you owned the properties you would not have a mortgage. The reason the lenders have to charge landlords who have more than four mortgaged properties a higher rate than those who have fewer is because the government imposed the new Prudential Regulation rules on the lenders following the credit crash of 2008. Lenders are obliged to comply or lose their licence to lend. It has nothing to do with whether they have to undertake more work or whether they are profiteering. In fact you are fortunate that you have had the remainder of a five-year term to benefit from the old rules.


17:18 PM, 7th June 2021, About 3 years ago

Reply to the comment left by Simon Hall at 07/06/2021 - 15:00
I beg to differ, although you may percieved 'portfolio landlords' are being exploited, portfolio landlords may also rightly be assessed as being higher risk.

We are just emerging (hopefully) from the biggest economic shock since 2008, and possibly since WW2. There has been an eviction ban for over one year, and there has been many tennants and landlords alike who havn't been able to pay their rent or mortgage costs.

Not only will these debts continue to roll on for years, or be written off, but the economy as a whole is still recovering. There is also significant risk of further variants of covid causing more disruption, and maybe further lockdowns. On top of that the regulator enviroment has also changed in the last 5 years.

It's very possible that the risk profile of portfolio landlords has increased and the underwriting will be based on a sector view, not only your own individual past performance.

On top of that, its pretty typical in most financial businesses to not provide as competative offers to existing customers as they do to new customers. Thats just business.


19:23 PM, 7th June 2021, About 3 years ago

Reply to the comment left by TrevL at 07/06/2021 - 17:18I disagree a portfolio Landlord should be a lower risk as he's got more properties to spread any shortfalls over.
E.G. a LL with 2 properties and 1 fails to pay rent = 50% reduction in rental income. whereas a LL with 10 properties and 1 fails to pay = 10% reduction

Simon Hall

20:18 PM, 7th June 2021, About 3 years ago

Reply to the comment left by David at 07/06/2021 - 15:49
Thanks David. It would appear you have grasped the objective of my post.

Simon Hall

20:19 PM, 7th June 2021, About 3 years ago

Reply to the comment left by Gromit at 07/06/2021 - 19:23
Good shout.

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