Following the introduction of new rules by the Prudential Regulation Authority (PRA), portfolio landlords have a reduced choice of lenders.
The rules introduced in September 2017 changed the underwriting process for lenders offering new commercial mortgages for buy to let landlords with four or more properties. These created stricter affordability criteria and an increased amount of documentation needed to support a loan application. This has led to delays in processing applications.
Research from Paragon discovered that 45% of portfolio landlords who needed a commercial mortgage, found that there were fewer lenders willing to provide them with a loan. Because of the extra complexity of assessing mortgage applications from portfolio landlords, some large lenders have withdrawn from this sector of the lending market. This has left opportunities for smaller more specialised lenders to provide finance for portfolio landlords. Many alternate lenders have added features to their products to make them more attractive to portfolio landlords.
Most non-portfolio landlords have reported no reduction in the number of lenders available, though a survey of landlords found that 80% of them said that they had to supply extra documentation for mortgage applications.
It has been suggested that the PRA regulations and tax changes that affect landlords were designed to reduce buy to let activity. Whilst there are barriers to landlords, there are still plenty of lenders that provide but to let mortgages and buy to let investments can still provide decent returns. A mortgage broker can find the best mortgage deals for landlords.