BTL PORTFOLIO LENDING ACTIVITY LIKELY TO INCREASE POST-PRA UNDERWRITING CHANGES

18 May 2017

The market for portfolio buy-to-let lending is likely to increase following the introduction of the new PRA underwriting changes which authorised lenders will need to have in place by the end of September.

That was the view of a panel of experts speaking at the FSE Manchester event today, the premier exhibition for the financial services industry in the North of England.

Gary Bailey of Together said: “I think there will be a shift in the type of buy-to-let landlord customer we’ll see over the next two years. Portfolio landlords will become much more prevalent as will the market for limited company buy-to-let lending.”

Other members of the panel agreed that both the buy-to-let sector itself and landlords had undertaken a noticeable shift.

Adrian Moloney of OneSavings Bank said: “We have already seen a major shift in buy-to-let with more five-year fixes plus an increase in demand for limited company mortgages. In a sense the sector has, almost overnight, become more professional and it will be interesting, come October, when the additional underwriting standards are brought in to see how this develops further. We’re already seeing large landlords looking at their finance options.”

The new underwriting changes, to be introduced by lenders from the end of September, will mean those borrowers with four or more loans must be treated as ‘portfolio landlords’ and all their loans taking into account.

Robert Sinclair asked the lender representatives on the panel whether they would be active in the portfolio lending sector given there had been speculation around whether some lenders would withdraw because of the increased underwriting requirements. Moloney said: “We will absolutely be playing in that market.”

Louisa Sedgwick of Vida Homeloans also confirmed that it would be active in the sector. She also gave a view on how the buy-to-let sector might develop: “I agree that the sector is likely to become more professional. What we would describe as ‘dinner party landlords’ are likely to dump their properties back on the market which may help first-time buyers looking for a property.”

Rob Jupp of Brightstar was however concerned about lenders, who intend to keep offering mortgages for buy-to-let portfolio landlords, leaving it too late before revealing their lending policies. “At the moment I feel it’s a bloody mess,” he said. “Accountants are giving different advice, some lenders are saying do this, others are saying do that; I really feel for advisers who are in the firing line on this one.”

Sedgwick suggested that lenders are unwilling to be first to market in this area. “Lenders are holding their cards close to their chest on this one; unfortunately the longer this goes on, the more problems it is going to cause.”

FSE Manchester is taking place today at The Emirates – Old Trafford. Visitors have access to over 60 exhibitors including lenders, distributors, networks, insurance providers, technology companies, and many more.

Further details on all Financial Services Expo events in 2018 – Wales (June), London (September) and Midlands (November) are now available at: www.financialservicesexpo.co.uk