Ahead of the Prudential Regulation Authority's (PRA) changes to portfolio landlord underwriting standards, we wanted to give you the confidence in knowing that we'll remain committed to supporting portfolio landlords.
And with the regulatory changes coming into effect on 30 September 2017, we recognise the need to provide clarity as early as possible. So, to help support you and your clients with their longer-term planning, we're sharing as much information as we can right now.
We'll continue to work with you in the run up to the changes by providing regular updates to our dedicated portfolio landlord changes page, where you'll also have the option to submit any questions you'd like answered, helping to shape our future communications.
Here's a summary of the key points:
Definition of a portfolio landlord
- A borrower with four or more distinct mortgaged Buy to Let rental properties
This includes any applications currently in progress with TMW, regardless of LTV.
We don't consider foreign properties when assessing portfolio landlords.
- We'll continue to accept portfolios of all sizes, with no limit to the number of properties accepted.
- For portfolio landlords, an Interest Cover Ratio (ICR) of 145% will apply to any new applications, regardless of your client's tax status. The minimum ICR for Houses in Multiple Occupation will remain at 170%.
- There'll be no changes to LTV limits, maximum loan sizes, minimum income criteria or stress rates.
TMW Online keying of applications - what's changing?
- We'll now ask for your client's income on all cases at Decision in Principle (DIP). Proofs won't be asked for in all cases, but where it's needed it'll be asked for by the underwriter at application.
- At DIP we'll identify whether your client is a portfolio landlord by asking for the number of mortgaged properties in your client's portfolio. Then we'll ask for the total value, rental income and outstanding mortgage balances secured against the portfolio.
Packaging of applications - what's changing?
- We'll ask for three months' personal bank statements and a property schedule for all portfolio landlord applications to assess the risk associated with your client's properties.
- To ensure that we process your portfolio landlord cases in the most effective way, we're investing in a new online solution. This will allow you to populate the portfolio property details, that'll then be validated automatically, and the results sent to our dedicated team of portfolio underwriters for assessment.
- Depending on the complexity of the case and size of the portfolio, for a limited number of cases we may request further supporting information.
Help and support
We'll continue to update our dedicated portfolio landlord changes page as we're able to confirm more details, including the date we'll be implementing the changes.
Remember, your BDM is available to help you through these changes and will happily discuss any support or training you may need which can be planned in nearer the implementation date.