The Prudential Regulation Authority’s SS 13/16 landlord underwriting standard comes into force in September. Lenders are adapting their processes and criteria to handle business from ‘portfolio landlords’ – those with four or more properties – separately.
The solution is being implemented by The Mortgage Works (TMW), a subsidiary of Nationwide which offers specialist buy-to-let products through intermediaries.
TMW last week unveiled its criteria for portfolio landlords, saying it would make no changes to LTVs, loan size or income criteria and will accept landlords with unlimited numbers of properties. Its Income Coverage Ratio will be (ICR) 145% (170% for Houses of Multiple Occupancy) regardless of a landlord’s tax status.
However, it said landlords with complex portfolios may be subject to additional questions about the value, rental income and outstanding mortgage balances secured against the whole portfolio. They may also be asked to supply a business plan, and details of how long the properties have been owned, the landlord’s current approach and future plans. Brokers have expressed concern that there are not enough details about the new process at this time.
The online solution will allow brokers to upload portfolio property details directly into the platform. The details will then be validated and sent to TMW’s dedicated team of portfolio underwriters for assessment, significantly simplifying the underwriting process.
Rob Stevens, head of property risk, operations and strategy for Nationwide, said: “Ahead of the PRA’s changes to portfolio landlord underwriting standards, TMW has confirmed its commitment to supporting portfolio landlords.
“We’ve worked closely with EDM to give brokers a choice around how to submit portfolio property details. They can key the details directly into the platform, or collect the information offline using a dedicated TMW form, which can be uploaded into the platform to populate the information required. The PRISM solution will then validate this information and pass the results to our underwriters for assessment, reducing the time it takes for us to reach a lending decision.”
Joe Pepper, managing director for EDM Mortgage Support Services, said: “A significant number of buy-to-let landlords have portfolios with four or more mortgaged properties, a big enough proportion to add significantly to lenders’ workloads. For each affected landlord, lenders must research their properties and fully appreciate values, rental yields and mortgage payments.”
He said technology offers solutions to this increase in workload but lenders may struggle to integrate them with established systems.
“We have worked hard with Nationwide and have a proposition to suit the needs of the buy-to-let industry in light of the PRA requirements. Crucially this technology can be quickly and easily delivered as a standalone solution to buy-to-let lenders without changing existing mortgage platforms.”