New BtL mortgage restrictions in place

September saw the start of yet another restriction in the lettings industry. This time the change pertains to the financial sector, with the Prudential Regulation Authority (PRA), setting tougher lending standards for landlords with four or more mortgaged buy-to-let properties. The new guidelines are in response to a review that found the incidence of mortgage arrears grew as a landlord’s portfolio expanded.

The new standards came into force on 30th September 2017 and sees landlords deemed as ‘portfolio’ fall into a special underwriting process. Under the new guidelines, lenders will have to take a landlord’s experience, their full portfolio, their rental income, any outstanding mortgages, and their assets and liabilities into account. Landlords will need to provide a full breakdown of rental properties, a business plan and cash flow projection to support a new application, as well as illustrating that each of their buy-to-lets ‘washes its face’ in terms of mortgage repayments.

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