New lending rules for portfolio landlords come in next month
Portfolio landlords who own four or more mortgaged BTL properties are set to be affected by the new underwriting requirements from September 30.
The new Prudential Regulation Authority (PRA) rules mean these landlords must provide details of their assets and liabilities, and declare future investment property intentions, as well as the property schedule already requested for BTL applications.
But further details, such as cash flow, will only be required in more complicated cases which are expected to account for a very small proportion of applications.
Leeds Building Society has increased the maximum portfolio size from eight to 10 mortgaged rental properties and raised the maximum number of Holiday Lets by 33 per cent.
Jaedon Green, Leeds Building Society’s director of product and distribution, said: “The BTL criteria changes we introduced at the start of this year were well received by the industry.
“To further develop our proposition we’re preparing our underwriting and broker-facing colleagues to ensure that at launch we‘re able to fully support our intermediary partners.”
Leeds adjusted its portfolio lending criteria in January, and it has confirmed there will be no further changes to its existing loan to value limits, maximum loan size, interest coverage ratio or stress rates.
Other lenders, including BM Solutions, Aldermore, Coventry, Accord and Nationwide have also outlined their approach to portfolio landlords ahead of the PRA’s September deadline.
Liz Syms, chief executive at London-based Connect Mortgages, said: “Leeds are dealing with landlords with up to 10 properties. They are not in it for larger, serious portfolio landlords.
“Not long ago they were only lending to people with up to five properties. They could have dropped down and gone to four, but they are somewhere in between – not quite serious professionals but more than ‘accidental landlords’.
“If they get presented with someone with 10 HMOs (houses of multiple occupation) with multiple tenants, that is where they reserve the right to more information and ask to dig a bit deeper.”