Buy-to-let  

Keystone increases broker procuration fee

Keystone increases broker procuration fee

Keystone is to increase the procuration fees it pays to brokers on its Classic Range by 10 basis points from October 2017.

A spokesman for Keystone stated the increase is being introduced in recognition of the increased workload which brokers will have to undertake following the Prudential Regulation Authority's (PRA) new guidelines on underwriting buy-to-let mortgage applications from portfolio landlords. 

The increased procuration fee will be applied to all cases even if the client does not meet the portfolio status definition.

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The PRA defines a portfolio landlord as a borrower with four or more distinct mortgaged buy-to-let properties, either together or separately, in aggregate.

From October, lenders will be required to adopt a specialist underwriting approach which includes gathering more detailed information than they may have previously requested.

David Whittaker, chief executive of Keystone, said: “We’ve always focused on the more professional landlord with complex borrowing requirements, so in a sense, it will be business as usual for us as we already take a specialist approach to underwriting.

"However, we are mindful that the PRA has created a clear distinction between portfolio and non-portfolio landlords, and as such, we will have different underwriting policies for both.”

In practice, he said, this means that Keystone may request more detailed information from portfolio landlords to help make the appropriate lending decision.

For brokers it will mean that they will have to spend considerably more time working closely with their clients to collect and collate the necessary paperwork before being able to submit a case.

Mr Whittaker added: “As a lender, it is important to us that we both acknowledge and reward the additional legwork being undertaken, and we will keep proc fees under review whilst the new processes are bedding in.In the meantime, we are working hard to reduce the impact on brokers and landlords.

"We have some new tools in the pipeline to help streamline the process for brokers and we are determined to ensure that service levels are maintained as the market adjusts to the new environment.”

Phil Whitehouse, managing director at the MCI Club, said: ‘’Mortgage intermediaries will no doubt welcome the pleasing news that Keystone is increasing its procuration fees to reflect the extra work required in the portfolio buy-to-let market.

“It will be interesting to see how other lenders will view this move by Keystone but I doubt it will lead to wholesale changes at present.”