Instead, as our own lender matrix shows, with every different lender the adviser is going to need to know specifically how they approach the rules, what their requirements are, and indeed how they simply define a portfolio landlord.
While we might think that the Prudential Regulation Authority (PRA) has spelt this out, there are still differing interpretations and again advisers will need to be prepared for each of those.
Planning and preparation really cannot be under-estimated because there is already an expectation that work levels for advisers are going to be increasing. Having that level of understanding prior to beginning work on a case will certainly be a time-saver, as of course will having a working knowledge of what information the lender wants from the client across their entire portfolio, and the format they’re going to require that in.
Let’s not forget that those requirements are going to include both an existing and future business plan, which could well be a new experience for most landlords, regardless of whether they’ve been defined as portfolio or not.
I’m sure that if you ask most landlords what their business plan is they would cover off their properties being their pension plan or they might have a vague idea about a future exit strategy, but few will be set in stone and (I would suggest) fewer would have everything down in writing.
We’ve created a business plan template document which covers off current and future strategies but also allows the adviser or client to document just what they have in their portfolio.
The plan is that if advisers can get into the habit of helping their clients produce such documentation prior to the search for funding, then it should concentrate the mind, help source the right product, and ultimately smooth the way through the lenders’ information requirements – however wide and deep these might be.
Taking a step back
Overall, no-one should expect this to be plain sailing – and this is not down to the performance of the adviser. Instead, we have to look at what lenders are dealing with and how they step up to the plate.
It’s perhaps no surprise that some are effectively taking a step back from the sector because of the rigour of the changes – they might not publicly be saying this but look at the way the changes are being introduced and it should be obvious that some are less keen to do this type of business now, than in the recent past.
This too will bring issues in terms of less appetite to lend but I don’t expect it to be too worrying as others will fill potential gaps.
Certainly, the specialists who are either not impacted or are already set up for this type of business (or both) will be looking to forge ahead.
The important point for advisers is to gain that level of understanding about how each lender now addresses portfolio landlord clients and be in the best position to provide everything they need.
And, as a final point, I hope to see those lenders who are asking advisers to do more work on these cases to increase their procuration fee accordingly.