The PRA underwriting standards will mean more stringent affordability assessments across the market and lenders will need to apply a specialist underwriting approach.
Aldermore has issued guidance on its new rules forportfolio landlord clients as it looks to move in line withPRA underwriting standards which are due to come into effect in September.
The changes will mean more stringent affordability assessments across the market and lenders will need to apply a specialist underwriting approach.
From September portfolio landlord clients, who under the new regulation will be defined as those who have four or more mortgaged buy-to-let properties, will be splitinto two categories to determine what further information needs to be provided to underwrite the individual case.
Documents required by the lender include:
• Portfolio schedule
• Business Plan Documents required:
• Portfolio schedule
• Business Plan
• 12 month cash flow forecast Statement
• Statement of Assets and Liabilities
Standardised templates will be available for each of the information requirements.
In addition for cases where the applicant has 11 or more mortgaged buy-to-let properties with Aldermore or total borrowing with Aldermore is £1m or more, a face to face interview will be required.
Other checks will include portfolio affordability testing, rental income validation by postcode, and where personal income is used, assessment of living costs and essential expenditure.
Charles McDowell, commercial director, mortgages, at Aldermore, said: “We recognise that there are big changes ahead and as a business, we have focused our attention to ensure that we and our brokers are best placed to meet these required changes.
"Having spoken to brokers, we recognise that lenders need to respond to the changes as there is currently not enough support available for brokers who need to adapt. This is why we have created the guides which we believe will help to provide the necessary information and support.
“We want to assure our broker partners that we remain committed to the buy-to-let market by doing everything we can to support portfolio landlords when these changes are implemented later in the year.“
