Portfolio landlords are rising above tough regulatory changes
Despite the latest raft of extra rules around buy-to-let lending for portfolio landlords, it seems that demand is still strong for these specialist mortgages.
The latest data from UK mortgage company Accord has revealed that 32% of all its buy-to-let mortgage applications came from landlords who own four or more properties – the required criteria to be considered a portfolio landlord – since September last year.
It was in September that the Prudential Regulation Authority (PRA) brought in rules for stricter underwriting processes by lenders for portfolio landlords, tightening affordability levels and reducing the availability of mortgages for some prospective borrowers. The new regulations mean that a portfolio landlord’s entire lending portfolio is now assessed during the application process.
The results seen by Accord prove that, rather than being deterred, the sector is maintaining resilience and adapting to the changing market.
Chris Maggs, commercial manager at Accord, said: “We have seen a significant demand for buy-to-let mortgages from both experienced and first-time landlords this year. 2017 was a year of remortgaging for landlords who reaped the benefit of some exceptional mortgage rates, and 2018 is likely to be no different.”
Standing their ground
He added: “Last year Accord, like many other lenders, adapted its mortgage offerings to meet the changing needs of the market. Equally, as new regulation was implemented landlords have begun to adapt to ensure their business withstands the changes.”
Consumer landlords – also known as accidental landlords, or those who rent out a property where they or relatives have lived – accounted for 18% of Accord’s business since April last year, an indication that many homeowners are choosing to hold onto their homes and rent them out, rather than sell.
Jaedon Green of the Leeds Building Society believes that a stricter lending process will mean that questions are asked sooner rather than later in the application process, meaning less follow-up queries and a smoother process.
He added: “Contrary to the doom-mongers’ predictions, underwriting approvals have risen, suggesting lenders’ pragmatic response to the regulatory changes has led to better-quality submissions, helping us to meet the needs of our portfolio landlords and support the next phase of evolution in the buy-to-let market.”
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