Aldermore has provided details on the changes being made to its underwriting process ahead of tougher industry-wide regulations for portfolio landlords.
The lender has announced it will split portfolio landlords into two categories to determine what further information needs to be provided to underwrite the individual case.
For landlords with up to 10 mortgaged buy-to-let properties with Aldermore, brokers will need to submit a portfolio schedule and a business plan.
For those with 11 or more mortgaged buy-to-let properties with Aldermore, additional documents will be required - a 12-month cash flow forecast statement and a statement of assets and liabilities.
Standardised templates are to be made available for each of the information requirements.
A face-to-face interview will also be required in cases where the applicant has 11 or more mortgaged buy-to-let properties with Aldermore or total borrowing with the lender is £1m or more.
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.
Due to be introduced in September this year, the Prudential Regulation Authority’s (PRA) changes will mean more stringent affordability assessments for portfolio landlords - defined as those with four or more properties - are necessary across the market.
Brokers have previously complained about the lack of clarity provided by lenders over their approach to the PRA rules, claiming it has left them unable to give advice to their current clients.
Ian Gwinnell, director at Stafford-based All Counties Financial, commented: “I think the approach that the lender is taking is sensible. It is making sure that things don’t happen the way they did in the residential market in years to come.
“We look back at the residential market from the period of 2000 up to 2007 when it was at the height of irresponsible lending and a lot of action was taken after the crash. If the market had adopted a bit more responsible lending, then we would not have experienced the issues that we did.”
simon.allin@ft.com
