Ever since the introduction of the various recent changes by the Prudential Regulation Authority, known as the PRA, there has been a drop off in the options for buy to let landlords in the UK.
The new rules, which the PRA brought in back in September 2017, have had a big impact on the mortgage market. This is all according to information on private rented sector trends compiled by Paragon. The new regulations dictate that all lenders apply more detailed underwriting principles when looking into portfolio business from landlords with more than three mortgaged properties.
The study found that more than four in ten landlords applying for mortgages since the new rules came into effect have found that they have had fewer options in terms of lenders to choose from. However, for landlords with no portfolio, the majority of more than two thirds found that there had been no change in the number of available lenders.
Around 80% did say that they had found there was an increased amount of paperwork and documentation across the market. A similar number noticed a marked increase in processing times for mortgages, with the larger portfolio sizes usually translating to longer waiting times from mortgage lenders. Loan to value ratios are also smaller, according to around a third of all landlords applying for mortgages.
All of this is making it more difficult for the large mainstream lenders to underwrite larger portfolios for the whole range of landlords. This is resulting in specialist lenders playing to their strengths and catering for landlords with numerous properties.
John Heron, managing director of mortgages at Paragon, said: ‘As a result, we’re seeing a polarisation in the market, with specialist lenders playing to their strengths, adding product features that enhance value for larger scale landlords and increasing their share of more complex, portfolio business.’
So, if you have a number of properties in your portfolio it might be easier to go with one of these specialist lenders, with first time landlords or small investors sticking to the mainstream providers. It’s worth thinking carefully in order to give yourself the biggest choice of lenders as well as the best possible rates.
If you would like more information about PRA and any other aspects of mortgage lending for buy to let landlords in and around the Norwich area, or if you would like to chat about anything to do with property investment, give us a ring on Norwich 01603 567804 or send us a message.
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