After a tumultuous few years for the buy-to-let market (to put it politely), the sector is bracing itself once again for further change.
Next month, will see phase two of the Prudential Regulation Authority’s standards come into play. The rules will see lenders forced to employ more stringent affordability checks for portfolio landlords, including requiring those landlords with four or more properties to provide mortgage and income details for each.
Specialist Lending Solutions spoke to industry experts to find out their top tips on how brokers can best navigate the changes.
Bob Young, chief executive officer, Fleet Mortgages
It will be more complicated than you think, look for simplicity – it is out there.
Beware of doing more work for the same proc fee. If the lender is asking you to do more work (possibly at a higher rate) ask what’s in it for you. Look for lenders who are inputting their own data.
Prepare your client to deliver more information than they’re used to giving. This will soften the pain as your lender keeps asking for more.
Jane Simpson, managing director, TBMC
Contact all of your landlord clients to inform them of lending changes for portfolio landlords, so that it does not come as a big surprise to them when they are looking to make a new purchase or remortgage their properties. This demonstrates that you are on the ball and thinking about their future financial requirements.
In initial discussions with a client, establish how many properties they have and check that they have the necessary documentation for their buy-to-let business, such as a comprehensive portfolio spreadsheet including rental income and mortgage payments. Other requirements are likely to include three months’ bank statements, cash flow forecasts and SA302s. Lenders will generally be looking for more supporting evidence for portfolio applications, so being prepared early on could save time later.
Research the buy-to-let mortgage market and familiarise yourself with lender policy announcements in the lead up to 30 September. Individual lending policies are likely to vary considerably and clients will feel confident if you are knowledgeable about the new approaches by different lenders.
If you find that portfolio cases are becoming too complex and are taking up too much of your time, contact a buy-to-let mortgage specialist who is up-to-speed on all the latest changes and can help to place your cases.
Ying Tan, managing director, The Buy to Let Business
Be more thorough. There will be hold ups as lenders get to grips with the new requirements and the more information and documentation you can provide at the onset the better. Make sure you have every base covered.
Make use of your business development managers (BDMs). They are not there to simply encourage you to use their products, they’re there to assist you. Let them. Ask them any questions you have.
Be knowledgeable and prove your worth. Get ready to answer any questions your clients may throw at you. Make them feel reassured that you’re fully up to date with the new developments.
Go the extra mile for your clients. Consider producing a factsheet and issuing it to your client database.
Steve Olejnik, chief operating officer, Mortgages for Business
Make sure you understand how each buy to let lender intends to deal with applications from portfolio landlords. As we have not yet heard from all firms, keep an eye out in the trade press and/or contact the lenders directly and ask.
We know that all lenders will be requesting considerably more information and paperwork to accompany applications. In particular, lenders are going to want to see the details of landlords’ entire portfolios so make sure you understand exactly what each lender will require and how they want you to submit it. Bear in mind, if they don’t have a technical solution, you could spend hours inputting data.
Prepare yourself and your clients for a dip in lender service levels. There are bound to be teething problems and if fewer lenders accept portfolio landlords, the sector could experience severe delays.
If you’re not planning to become an expert in specialist lending, align yourself with a broker who is and make sure they have direct access to the appropriate lenders.