Half of brokers sleepwalking into looming rule change

Half of brokers sleepwalking into looming rule change

Almost half of buy-to-let (BTL) brokers remain in the dark about the new portfolio landlord application rules as the deadline for their roll-out fast approaches.

Some 54 per cent of brokers are comfortable that they fully understand what the upcoming PRA changes for portfolio landlords entail and what they will mean for their business, according to a survey of more than 200 BTL brokers for Kent Reliance.

But with the deadline less than a month away, the remaining 46 per cent lack a full understanding of the situation.

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One in ten (13 per cent) admitted that they were aware of the changes but not when they are coming into effect, while nearly a third (31 per cent) had heard of the new rules but didn’t fully understand how to apply them to their business.

Some 2 per cent did not even know about the changes, which were announced in September 2016 and will come into effect on 1 October.

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.

The changes are designed to ensure landlords will be able to afford new property acquisitions now and in the event of a rise in interest rates.

Since the PRA announced the changes, some lenders, such as the Co-op Bank, have dropped out of the portfolio BTL market.

Several lenders have come forward with their requirements, with some making minimal changes to their approach and others opting for a more wide-reaching overhaul.

Brokers that are already in the know about the changes are optimistic about the opportunities that lie ahead, with third (29 per cent) believing the PRA rules will increase future opportunities compared to 14 per cent who think they will reduce overall BTL transactions.

The survey was conducted between 8 and 18 August by Watermelon Research.

Adrian Moloney, sales director at OneSavings Bank, said: “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.”

Nick Helm, senior mortgage broker at Kent-based Mortgages for Business, said his firm was fully up to speed with the changes but that may not be the case for individual advisers.

“If those numbers are a fair reflection of the wider market, there is still more to be done to raise brokers’ awareness and landlords’ awareness,” he added.

“We issue weekly updates and a quarterly update full of information so past and present clients know what is required and what is changing.”