A free mortgage advice clinic has been launched by The Happy Tenant Company in conjunction with the mortgage broker Lee Grandin of Landlord Mortgages and Lend2Landlord, to help prepare and educate portfolio landlords about changes being introduced by the Prudential Regulation Authority (PRA).
The Bank of England’s PRA’s underwriting standards is due to be implemented on 30 September for landlords with four or more mortgaged properties, as part of its efforts to cool the buy-to-let market.
The change means that, for the first time, lenders will need to undertake a full analysis of a landlord’s entire property portfolio as part of the lending process.
The Happy Tenant Company, a residential asset management company which provides landlords with fixed-fee professional property management, is attempting to encourage landlords to work with their property management companies and brokers to get paperwork in order so they are fully prepared when the time comes remortgage.
Adam Joseph, CEO of The Happy Tenant Company, said: “The borrower costs that will be taken into account by lenders include everything from management and letting fees, council tax and service charges to repairs, insurance, voids and ground rents, as well as any other costs associated with renting out a property.
“Lenders will want to know a landlord's current approach and future plans of portfolio management which is why we have joined forces with Lee Grandin to help support our portfolio landlords.
“Our property managers keep stringent records of all costs associated with our landlords' portfolios, which have been crucial following the introduction of stricter affordability tests imposed by lenders at the start of the year. Now, however, this will be even more important as landlords will need this information as part of their business plan to support new mortgage applications.”
Lee Grandin, managing director at Landlord Mortgages and Lend2Landlord, will be advising new and existing Happy Tenant Company landlords during their monthly ‘Mortgage Clinic’ on how to get organised to support a smooth application.
He commented: “From October PRA regulations will set guidelines on how lenders should approach lending to portfolio landlords. It is important that a landlord understands that there isn’t a definitive set of rules but a general requirement that a landlord’s portfolio rental business is sound, viable and sustainable.
“It will require that a landlord produces a business plan to support its funding requirements. We perceive that specialist brokers like ourselves, accountants and asset management firms like The Happy Tenant Company, will play a far greater role in the buy-to-let mortgage funding application process.”
Grandin added: “Inevitably the changes will result in less competitive landlords (smaller sized landlords) being squeezed out from the market.”