While much has been said about the impact of PRA rules on investors, the impact on lenders has not been fully addressed
We have all discussed the Prudential Regulation Authority’s plans for tighter lending criteria in buy-to-let, but I was interested to see a recent newspaper article focused on one area in particular: landlords with multiple properties.
Under the new rules, if a landlord with four or more properties wants to refinance one or purchase a new property, they will have to submit mortgage details and income information to the lender for every property they own.
As the newspaper article rightly points out, this means that, if a landlord has 10 properties in his portfolio, the lender will have to review each of them and assess mortgages and income on all 10 – clearly a time-consuming task.
Time is money
Indeed, while much has been said about the impact of PRA regulation on property investors, the impact on lenders has not been fully addressed. Time is money, as they say – and, if lenders have to spend lengthy periods on each buy-to-let case, those perhaps less dedicated to our sector may bow out.
Specialist lenders have much more experience in complex cases, so are no doubt more used to taking a little longer with each client. But if buy-to-let is not your bread and butter, will it make good financial sense to have a member of staff spend so much time assessing each customer?
I sincerely hope this does not happen, because choice and variety are what makes this market so forward thinking and accessible.
Little impact
What we can say, however, is that these changes should have little impact on property investors’ ability to get a mortgage. As my knowledgeable peer, Steve Olejnik of Mortgages for Business, points out in the newspaper article in question, specialist lenders already employ robust underwriting standards. Although the proposed new process may be a little lengthier, short of being somewhat frustrating for landlords it should not affect too much their ability to complete on a deal.
Now, with just a few weeks of this year left, could buy-to-let perhaps stay out of the news for a change?
Ying Tan is managing director of Buy to Let Club
Ying the BTL mortgage market is bound to stay out of the news for at least the next decade and hopefully for ever as it “withers on the vine” due to David Cameron and George Osborne’s removal of the £15 billion a year tax subsidy to landlords.