Buy to Let

Accord reveals portfolio buy-to-let underwriting approach

Accord has become the latest lender to announce details of its buy-to-let lending criteria for portfolio landlords, which come into effect on 30 September.

The lender said it will assess the financial strength and competency of a portfolio landlord by taking into consideration their experience in the buy-to-let market, their full property portfolio and any outstanding mortgages along with their assets and liabilities.

Existing rental calculations will apply for new borrowing, meaning all of the properties a landlord already has must collectively meet a minimum rental calculation of 135 per cent interest coverage ratio (ICR) at a stressed rate of 5 per cent.

There will be no changes to loan to value limits, maximum loan size or minimum income criteria, while stress rates and the number of properties accepted will remain the same.

The lender, which is part of Yorkshire Building Society, has made the announcement ahead of the rollout of stricter underwriting standards for portfolio landlords – defined as those who own four or more properties – set out by the Prudential Regulation Authority (PRA).

Several other lenders have already outlined their approach, including Aldermore, which will ask for additional supporting documents for those with 11 or more mortgaged buy-to-let properties.

Chris Maggs, Accord Buy To Let’s commercial manager, said the company had tried to make its portfolio lending criteria “as simple and straightforward as possible”.

He added: “In addition to our standard criteria, portfolio landlords will be required to supply details of any applications currently being processed with other lenders and complete an assets statement. 

“We will also ask these landlords if they anticipate any financial changes or changes in circumstances which could impact the affordability of their portfolio.

“If brokers need any further clarity they can contact our business development advice team on 0345 1200 866, or speak to their knowledgeable Accord BDM.”

Liz Syms, chief executive at London-based Connect Mortgages, commented: “The actual statement [from the PRA] in terms of how lenders should underwrite only contains about one page of guidance. Lenders have all interpreted it slightly differently, and Accord has interpreted it relatively loosely.

“Portfolio landlords don’t tend to use Accord very much. At the moment, their current policy targets the smaller landlords rather than the larger ones, hence why their criteria requirements are not as detailed as those of other lenders.”

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