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Portfolio landlords struggle to secure mortgage finance in light of PRA changes

Securing a mortgage is a challenging feat for three quarters of portfolio landlords after the introduction of the Prudential Regulation Authority changes, figures from Foundation Home Loans has revealed.

Based on research by BDRC Continental, when asked how they had been affected by the PRA regulatory changes, 70% of UK landlords with over four buy-to-let mortgages said they had found obtaining finance a challenge. Just over half (51%) owning between one and three buy-to-let mortgages felt the same.

All figures are based on feedback from landlords that have applied for a mortgage/remortgage since the PRA changes came into effect on September 30 2017.

The PRA regulation states that 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 now be classified as portfolio landlords and subject to the new standards.

As a result, 48% of landlords 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.

What’s more, 28% of landlords 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,” said Jeff Knight, marketing director of Foundation Home Loans. “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.”

He added: “Our research last year proved that, at the end of the day, brokers and landlords are after pragmatic and straight-forward processes.”

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