The Prudential Regulation Authority’s (PRA) introduction of new portfolio landlord underwriting standards from 30th September 2017 will soon be upon us, and will impact both lenders and brokers alike.
Lenders who plan to support portfolio lending in line with the new regulations will need a clearly defined approach to make sure their underwriting and risk appetite is consistent, and ease of application is considered. While brokers will need an easy to understand set of criteria that’s transparent, makes sense and can be easily evidenced by the applicant.
At TMW we’ve already confirmed our commitment to continue to support portfolio lending. And to support you and your clients with their longer-term planning, we want to provide clarity by sharing more of the detail with you as soon as possible.
Our definition of a portfolio landlord
We’ll define a portfolio landlord as a borrower who has or will have four or more distinct mortgaged Buy to Let rental properties.
Submitting a portfolio application
We’ll ask for details of a client’s income on all cases at the Decision in Principle (DIP) stage. We won’t ask for proof of income in all cases, but where it’s needed it’ll be requested at application.
There’ll also be additional questions we need to ask to identify portfolio landlords at DIP stage. These will include the number of properties in a landlord’s portfolio on completion of the current mortgage application, and additional questions will be asked about the value, rental income and outstanding mortgage balances secured against the whole portfolio.
Depending on the complexity of the case and size of the portfolio, for a small number of cases we may ask for further supporting information.
Our ongoing commitment to Buy to Let lending
From 1st August, we have started paying retention procuration fees to intermediaries. As a significant supporter of Buy to Let lending, we remain committed to supporting our intermediary partners and will also continue to review our lending policy and criteria.
Some improvements we’ve recently introduced include the ability to scan and attach required proofs, making it easier to submit documents to us, along with the acceptance of photo proofs.
We’ve also introduced our Interest Cover Ratio (ICR) of 125% for lower rate tax payers, reflecting the different taxable income levels of landlords. You can find a useful guide to this, plus a comprehensive tax calculator to help illustrate the impact of the new tax rules implemented in April 2017 on our website at themortgageworks.co.uk.
Ask us a question, we’re here to help
We’ll continue to work with you to understand what you’d like covered in the run up to the changes. You can tell us what you’d like to know by visiting our website and submitting a question at themortgageworks.co.uk/pra-question.
You can also speak to your BDM for support, or contact us using our online instant messenger service Broker Chat by visiting themortgageworks.co.uk/brokerchat. We’re open Monday to Friday until 6pm.