Portfolio landlords finding it harder to secure mortgage finance post PRA

Michael Lloyd

January 23, 2018

Nearly three quarters of portfolio landlords have found it more difficult to secure a mortgage since the PRA changes were introduced, Foundation Home Loans has found with BDRC Continental.

The Prudential Regulation Authority (PRA) regulation means borrowers with four or more mortgaged properties will be classified as portfolio landlords and subject to the new standards, like submitting a forward-looking business plan.

As a result, almost half (48%) of landlords aware of the PRA changes think they will slow down the process of securing a mortgage. Two thirds of those who own 11 or more properties believe the range of mortgage products available to them will be reduced.

Jeff Knight, marketing director, Foundation Home Loans, said: “Whether these figures are to do with a natural period of adjustment or become the new norm remains to be seen.

“Nonetheless, in order to make this as smooth a transition as possible, brokers and lenders must work together to ensure things do not become unnecessarily challenging.

“Our research last year proved that, at the end of the day, brokers and landlords are after pragmatic and straight-forward processes.

“Considering the significant take-up from this group, we devised a proposition to make application as simple as possible – for example, with no need for evidence of a business plan.”

Some 28% believe the changes will make it more likely for their mortgage application to be rejected.

Furthermore, 70% of landlords with over four buy-to-let mortgages said they found obtaining finance a challenge since the regulation came into effect on 30 September 2017.

Half (51%) owning between one and three buy-to-let mortgages felt the same.

All figures are based on feedback from landlords that have applied for a mortgage/remortgage since the changes came into effect.

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