Just over half of buy to let brokers understand what the new portfolio landlord application rules are and how they will apply to their business when they are introduced in October, new research shows.
But while the majority of brokers are fully up to speed, some 31% are unsure what exactly it means for their business and 13% don’t know when the changes kick in, according to the research from Kent Reliance, part of the specialist lending group OneSavings Bank.
Many of those in the know foresee more administrative legwork and business uncertainty, but twice as many believe the new rules will create opportunities.
Overall 54% of brokers are comfortable that they fully understand what the upcoming PRA changes for portfolio landlords entail but that means that 46% still don’t understand everything they need to know.
The changes, which were announced in September 2016, will see a new minimum underwriting standard introduced for landlords with four or more properties as of 01 October 2017. Under the new rules, portfolio landlords, and their brokers, will need to provide detailed information on the cash flows and costs arising from multiple tenancies.
However, with less than a month until the deadline, the survey also found that 13% admitted that while they were aware of the changes, they do not know when they are coming into effect, while 31% had heard of the new rules but didn’t fully understand how to apply them to their business and just 2% had not heard of them.
Those brokers that are already in the know are optimistic about the opportunities the new framework will create and 29% believe the PRA rules will increase future opportunities compared to 14% who think it will reduce overall buy to let transactions.
Whatever the eventual outcome, some teething pains are expected. Some 29% anticipate that more applications will be rejected in the short term, 23% believe the extra administrative burden will cause the application process to slow down, with just 4% predicting that it will have no impact at all.
‘Brokers have had to get to grips a with a huge amount of regulatory change over the past 18 months including seismic changes to mortgage tax relief and stamp duty, so it’s understandable that some are still playing catch up, but with the PRA deadline looming, now is the time to buff up on the new rules and make sure clients are ready to comply,’ said Adrian Moloney, sales director at OneSavings Bank.
‘The new standards are business as usual for us as a specialist lender, but we know that brokers are going to have a lot more work on their plates, so we’ve done everything in our power to make life easier. Whether that’s through communicating our new lending criteria well in advance of the changes, or developing a dedicated technology platform, brokers ease of doing business with us remain a key priority of ours,’ he explained.
‘For those that still don’t feel confident in what these changes mean for their business, the time to get on top of it is now and we would encourage them to contact us as soon as possible so we can make the transition into the new landscape seamless for their business,’ he added.