Specialist Lending Solutions understands that as the Prudential Regulation Authority (PRA) rules are bedding-in, lenders are becoming more comfortable and more accommodating to landlords with complex cases.
However, brokers said it is not always clear how to interpret lenders’ rules, which leads to confusion about why cases have been accepted or rejected.
Coreco Specialist Finance director Julian Ingall said: “In all honesty I believe we need lenders to be a little more open about their interpretation of the PRA guidelines as there are huge variations in the market. In some cases, they can make a case fit that differs from their published criteria guidelines.
“This is of course their risk, but in some instances we have had cases approved without fully understanding how the lender has made it work. For example, where portfolios have some personal and some limited company, or different sources of revenue and income.
“This clarity around how they are fitting cases is essential to be able to effectively meet clients’ needs and direct them to the most appropriate lender quickly and efficiently,” he added.
Less rigid rules
This was echoed by Buy to Let Club managing director Ying Tan, who noted it was appreciated that lenders were becoming more flexible, but more formal acknowledgement of changes would be better.
“Since the PRA regulations came into force, placing clients with large background portfolios has certainly become more time-consuming,” he said.
“Although most lenders have disclosed their background portfolio interest cover ratio (ICR) criteria, they vary dramatically and the complexity of some lender portfolio reviews can be challenging.
“It is encouraging to see a number of specialist lenders becoming less rigid in their acceptance of borderline cases. We have found that some are certainly able to be more flexible for the right quality of portfolio. After all, lenders still need to write business.
“Although we would welcome a more formal change in criteria I imagine that this is unlikely in the short-term, however we may see some degree of change over the next quarter,” he added.
People interpret rules differently
Specialist Lending Solutions contacted several buy-to-let lenders to seek their views on the issues raised.
Foundation marketing director Jeff Knight noted it was important for lenders to be open to receiving broker feedback about concerns such as this.
“It’s always tricky when new rules come on board, people interpret them differently between what people say they are doing and are actually doing,” he said.
“We try to do exactly what we say we are doing. We’ve got a more straightforward process because we don’t ask for business plans, asset and liability lists and things like that, so we’ve not had any of that sort of feedback.
“But it’s important for brokers and lenders to work closely on that and one of key things of a good business development manager is they listen to what brokers are saying and feed it back. It’s in the interest for everyone to make this better,” he added.