There has been a significant increase in enquiries from portfolio landlords following the introduction of the new Prudential Regulation Authority (PRA) rules which have made the underwriting for landlords with four or more mortgaged properties much tougher.
According to bridging lender Octane Capital, enquiries from portfolio landlords during October and November were up 27% compared to the previous two months.
The vast majority of the enquiries being received by Octane are from smaller portfolio landlords, according to Jonathan Samuels, CEO of Octane Capital.
He said: “The PRA changes have placed a far greater emphasis on manual underwriting for portfolio landlords, which is something high street lenders simply don’t have in their DNA.
“The new stress-testing rules mean less box-ticking and more bespoke analysis of the way a portfolio is constructed, which not only requires a greater skill-set but is time-consuming, potentially squeezing margins.
“This is especially the case for non-standard borrowers, whose circumstances will often add even more complexity. As we see it, the PRA changes will trigger a paradigm shift within portfolio buy-to-let lending, moving the balance of power away from the high street to the growing ranks of specialist lenders who are more at ease with the type of underwriting now required. Just two months in since the new rules came into effect, and we are already seeing a clear uplift in enquiries from portfolio landlords.”