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PRA lending changes slow and complicate BTL mortgage apps, landlords say

  • 22/03/2019
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PRA lending changes slow and complicate BTL mortgage apps, landlords say
Criteria and application changes introduced by lenders as a result of Prudential Regulation Authority (PRA) portfolio rules have significantly affected the mortgage application process, according to landlords.


Three-quarters of landlords quizzed by Precise Mortgages said lending criteria and portfolio application process changes were making it more difficult to secure mortgages.

And 57 per cent added that the changes would slow applications down.

However the survey, conducted by BVA BDRC with the National Landlords Association, found more than six out of 10 landlords planning to fund new purchases this year will use buy-to-let (BTL) mortgages.

Of these, two thirds of portfolio landlords who are planning to buy more properties this year said they will do so through limited companies.


Dramatic swing

The lender said its survey showed landlords with bigger portfolios had “swung dramatically to using limited company status for new purchases”.

It found 64 per cent of landlords with more than four properties who plan to buy this year will use limited company status compared with just 21 per cent who intend to buy as individuals.

Across the market as a whole, 44 per cent of landlords planning to buy will use limited company status but that drops to 17 per cent among landlords with one to three properties.

And 37 per cent of smaller portfolio landlords will buy as individuals, the research showed.

Precise Mortgages managing director Alan Cleary (pictured) said: “The buy-to-let market is changing and the switch to greater use of limited company status is one aspect of the development underlining the increasing maturity of the sector.

“There are good reasons why limited company buy-to-let is dominating the purchase market and we expect that will continue to be the case this year and next.

“Brokers and customers however need expert specialist support when buying as a limited company or considering switching to limited company status as there are considerable costs involved.”


Merger proposed

Last week the board of Charter Court, parent company of Precise Mortgages, recommended shareholders agree to a merger with One Savings Bank (OSB).

If completed the deal is hoped to be concluded in the third quarter of 2019, but would see the retention of the existing lending brands.





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