While Nationwide’s The Mortgage Works (TMW) has released its criteria for portfolio landlords, other lenders have still not made their positions clear. Even if they continue to offer options for portfolio landlords, brokers are questioning what the fine detail will mean for applications and eligibility.
“We need more meat on the bones,” said Steph Charman, director of mortgages at Positive Lending. “What we have had has been fairly vague up until this point. It’s frustrating for brokers because they know the changes are coming but can’t prepare themselves or their landlord clients. The changes could be quite fundamental.”
In May, Specialist Lending Solutions sounded a call to arms, for lenders to share their portfolio criteria by the summer, however, with only one lender taking up the challenge, it seems the message has fallen on deaf ears.
Charman said TMW’s decision to release its criteria was a welcome first step. “It’s really good the TMW has come out and said what they will be doing with portfolio – we need more lenders to do that.”
There are also difficulties around underwriting interpretations, for example requiring extra information for ‘complex’ cases.
“There is no definition of what complex is. What is complex to TMW might not be for Kent or Paragon,” said Charman. “In some cases they may need proof of income – what is that going to look like? Is that just rental income or personal income? Some sort of underwriting plan or guidelines would be helpful.”
She added that it would be helpful for lenders that will require landlord business plans to provide templates. “Paragon already have that but it’s not something we have experienced across mainstream buy to let.”
The lack of overall industry detail is preventing brokers from properly advising landlords who are considering purchases in Q3 and Q4 and could aim for either regulatory period. “As we come to the deadline we will get more information but brokers want to start preparing their clients now,” said Charman.
Matt Hardman, director, The Buy to Let Broker, said it is unlikely that the landscape will be clear before the changes come in.
“I certainly think that until we hit September we’ll have no exact barometer on how lenders will work in practice, even then I am sure lenders will be keen to tweak their criteria as the months roll by once they see how business is affected, as residential lenders did with MMR.”
He added: “From experience those clients with larger portfolios who are taking specific tax advice are likely to go down a limited company route right now, especially against the backdrop of the harsh tax environment for personally geared landlords.”
A spokeswoman for The Mortgage Works said the lender has created a specific page for brokers on lending to portfolio landlords, with a facility for brokers to submit questions. TMW will continue to update the page with details and the date of implementation, and said its BDMs are able to offer support and training to those that need it.
“The Mortgage Works historically have more experience than many in this arena and so I think it would be a positive step for the marketplace as a whole to see a relaunch into this sector, which is in high demand for well advised landlords,” said Hardman.
At the National Association of Commercial Finance Brokers (NACFB) conference last month, specialist lenders Together and Shawbrook pledged to improve communications over their portfolio criteria.
Meanwhile Landbay’s John Goodall today said brokers should be preparing for a rush to beat the deadline.