What Effect Has the 2017 PRA Changes Had on Lending?

Back in October 2017, the Prudential Regulations Authority (PRA) launched new guidelines for portfolio landlords. Now, almost a year later, it is being reported that more mortgage brokers are using specialist lenders for the first time.

What Were the PRA Changes?

The Prudential Regulations Authority changes introduced new underwriting requirements for buy-to-let landlords with four or more mortgages properties in a bid to improve accountability.

This means that applying for portfolio mortgage loans became a more timely process with landlords required to provide more detailed information on the properties they own.

What Are the Effects of the PRA Changes?

A study by specialist lender Kent Reliance has found that more than half of brokers (52%) have used specialist lenders more frequently since the PRA changes came into force. Whereas almost a third (30%) have started using specialist lenders for the first time, or intend to do so.

44% of brokers said tha their landlord clients are struggling to adjust to the changes, with 34% stating those with four to six propertiees are having the most difficulty.

A representative at OneSavings Bank has said:

“Specialist lenders are uniquely placed to offer greater flexibility than traditional high street providers, so it’s perhaps unsurprising that many brokers have turned to specialists in the months following the PRA regulation changes.

“Although it was always going to be the case that the administrative burden of the PRA regulation would be most harshly felt by brokers and their portfolio landlord customers, many we spoke to in the lead-up to the changes told us that they felt underprepared for its implementation.”

Should Portfolio Owners Buy as Part of a Limited Company?

This comes off the back of new research by Precise Mortgages which has found two out of five landlords intend on using limited companies to buy properties over the next year compared to just over a quarter as individuals.

For those who own four properties or more, this number rises to 42% and those in London are most likely to purchase this way.

Furthermore, 89% of surveyed brokers said they expect the number of landlords with limited companies to increase over the next 12 months so they can continue to claim tax reliefs on mortgage interest.

Read more: The Pros and Cons of Ltd Property Companies

Looking for Current Portfolio Mortgage Rates?

Here at Pure Commercial Finance, we do things a little differently. We’re an independent, specialist brokerage which specifies in commercial property. That means we have the specialist skills, but have access to suitable products from a wide variety of lenders, both high-street and those who are also specialist.

So, speak to our friendly and knowledgeable team of financial brokers today to learn more about portfolio mortgages and current deals available to you. Call 02920 766565 today.

Article By Luke Egan

June 15th, 2018

Luke heads up our specialist property finance team where his focus is to drive our transactions valued between £100k and £5m.

Luke and his team manage enquiries from initial enquiry through to redemption. Luke also sits on the internal credit committee with Ben and Tom.

Luke joined Pure back in 2014 following a successful role in the Barclays property finance team that lasted over 8 years.

See more articles by Luke

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