Portfolio landlords finding it harder to secure mortgage finance

Regulatory changes to lending in the UK has seen landlords with a portfolio of properties finding it harder to get a mortgage, new research suggests.

Almost three quarters of portfolio landlords have found it more difficult to secure a mortgage since the Prudential Regulation Authority (PRA) changes were introduced, according to figures from Foundation Home Loans, based on research by BDRC Continental.

When asked how they had been affected by the PRA regulatory changes some 70% of landlords with over four buy to let mortgages and 51% with between one and three mortgages said they had found obtaining finance a challenge since the regulation came into effect at the end of September 2017.

The PRA regulation means lenders must introduce changes to the way in which buy to let mortgage applications are underwritten for portfolio landlords. Borrowers with four or more mortgaged properties will be classified as portfolio landlords and subject to the new standards, such as a requirement to submit a forward-looking business plan.

As a result almost half, some 48%, of landlords aware of the PRA changes think they will slow down the process of securing a mortgage, with two thirds of those who own 11 or more properties believing the range of mortgage products available to them will be reduced. Furthermore, 28% believe the changes will make it more likely for their mortgage application to be rejected.

‘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,’ said Jeff Knight, Marketing Director, Foundation Home Loans.

‘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,’ he explained.