There has been a significant increase in enquiries from portfolio landlords following the introduction of the Prudential Regulation Authority’s (PRA’s) new underwriting rules, reports Octane Capital.
The bridging lender has recorded a 27% increase in enquiries from portfolio landlords during October and November compared to the previous two months.
The PRA brought in new underwriting requirements for lenders advancing mortgages to buy-to-let landlords with four or more mortgaged properties at the end of September.
We have created a handy guide to help you understand the new rules in more detail: https://landlordnews.co.uk/landlords-guide-pra-portfolio-underwriting-changes/
Jonathan Samuels, the CEO of Octane Capital, reports that the vast majority of the enquiries being received by the firm are from smaller portfolio landlords.
He says: “The PRA changes have placed a far greater emphasis on manual underwriting for portfolio landlords, which is something high street lenders simply don’t have in their DNA.
“The new stress testing rules mean less box-ticking and more bespoke analysis of the way a portfolio is constructed, which not only requires a greater skill-set, but is time consuming, potentially squeezing margins.”
He continues: “This is especially the case for non-standard borrowers, whose circumstances will often add even more complexity. As we see it, the PRA changes will trigger a paradigm shift within portfolio buy-to-let lending, moving the balance of power away from the high street to the growing ranks of specialist lenders, who are more at ease with the type of underwriting now required. Just two months in since the new rules came into effect, and we are already seeing a clear uplift in enquiries from portfolio landlords.”
Landlords, have the new PRA underwriting rules affected your appetite for growing your portfolio? And, if you are looking to add more properties to your buy-to-let portfolio, are you more likely to opt for a specialist lender?