Paragon to launch second phase of PRA changes two months ahead of schedule

The new PRA rules will affect portfolio landlords with lenders required to use additional affordability tests on landlords with a portfolio containing four or more mortgaged properties. They are due to come into play on 30 September.

Furthermore, as of Monday 17 July all applications from portfolio landlords with four or more mortgaged properties must go through Paragon Mortgages. Mortgage Trust will now focus on applications from individual landlords with three or fewer, single, self-contained, mortgaged properties.

John Heron, managing director, Paragon Mortgages, said: “Currently, many lenders focus mainly on the rental income and value of the property they are lending against when underwriting buy-to-let property.

“At Paragon, we’ve always asked for information on all the properties a landlord holds and on the full range of their economic activity so that we can assess their business in the round and consider the impact of the new lending on their performance.

“Against this background, this implementation of the PRA Phase 2 changes should result in minimal change for intermediaries and their customers.”

Last month it was reported that advisers were encouraging clients to review their mortgages ahead of the changes.

Integrity Wealth Management director Michael Lawlor said all portfolio clients should be thinking about reviewing their position.

He said: “[Remortgaging] has been something I have been speaking to clients about for a while as the lender requirements have become so much stricter. All clients with portfolios should be speaking with their brokers to review their position.”

Meanwhile the first phase of changes, which came into play on January 1 and mean lenders now require a more detailed assessment of a borrower’s personal finances, are already having an impact on the market. According to a survey by Kent Reliance a quarter of landlords looking for finance have found securing a mortgage more challenging than last year.