The Happy Tenant Company has announced the launch of its free ‘Mortgage Advice Clinic’ with expert mortgage broker Lee Grandin of Landlord Mortgages & Lend2Landlord, to help prepare and educate portfolio landlords about PRA changes.
From 30th September, the Prudential Regulation Authority (PRA), part of the Bank of England, will start to enforce tougher standards for landlords with four or more mortgaged properties. The change means that, for the first time, lenders will need to undertake a full analysis of a landlord’s entire property portfolio as part of the lending process.
The Happy Tenant Company, which manages £500 million worth of property for portfolio landlords, says landlords need to be working with their property management companies and brokers to get paperwork in order so they are fully prepared when the time comes remortgage.
Adam Joseph, CEO of The Happy Tenant Company says: “The borrower costs that will be taken into account by lenders include everything from management and letting fees, council tax and service charges to repairs, insurance, voids and ground rents, as well as any other costs associated with renting out a property. Lenders will want to know a landlord’s current approach and future plans of portfolio management which is why we have joined forces with Lee Grandin to help support our portfolio landlords.
Our property managers keep stringent records of all costs associated with our landlords’ portfolios, which have been crucial following the introduction of stricter affordability tests imposed by lenders at the start of the year. Now, however, this will be even more important as landlords will need this information as part of their business plan to support new mortgage applications.”
If fewer lenders decide to operate in the portfolio landlord market, reducing competition, the application process could be further delayed as those still lending to the sector will be faced with a larger volume of business. Lee Grandin, Managing Director at Landlord Mortgages and Lend2Landlord, will be advising new and existing Happy Tenant Company landlords during their monthly ‘Mortgage Clinic’ on how to get organised to support a smooth application.
He comments: “From October PRA regulations will set guidelines on how lenders should approach lending to portfolio landlords. It is important that a landlord understands that there isn’t a definitive set of rules but a general requirement that a landlord’s portfolio rental business is sound, viable and sustainable. It will require that a landlord produces a business plan to support its funding requirements. We perceive that specialist brokers like ourselves, accountants and asset management firms like The Happy Tenant Company, will play a far greater role in the buy-to-let mortgage funding application process.”
Grandin adds: “Inevitably the changes will result in less competitive landlords (smaller sized landlords) being squeezed out from the market”