Lender sees surge in portfolio landlord applications

Lender sees surge in portfolio landlord applications

Fleet Mortgages, the buy-to-let and specialist lender, has announced a significant quarterly growth in the amount of portfolio landlord applications it has received.

Portfolio landlords are now officially defined by the Prudential Regulation Authority (PRA) since September 2017 as ‘borrowers with four or more distinct mortgaged buy-to-let properties, either together or separately, in aggregate’.

In the third quarter of last year, the number of portfolio landlord applications received by Fleet Mortgages as a percentage of total applications stood at 50 per cent but by the end of quarter four 2017 this had risen to 61 per cent.

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Fleet Mortgages' entire product range is open to portfolio landlords. 

At the end of last year, Fleet Mortgages launched two new pay-rate five-year fixes in its standard (individual) and limited company ranges. 

The standard product is offered at 3.89 per cent with an interest coverage ratio (ICR) of 135 per cent at pay rate.

The limited company product is again offered at 3.89 per cent but this time with an ICR of 125 per cent at pay rate. 

Both products come with a revert rate of Libor plus 4.2 per cent.

Bob Young, chief executive of Fleet Mortgages, said the shifting shape of the buy-to-let market is clearly moving in the direction of greater professionalisation, with more portfolio landlords who are not just investing for the long term but are increasingly likely to be doing this as their full-time day job. 

He said: “This is something of a move away from the days of the ‘amateur landlord’ and is a result of a number of factors, not least the increase in stamp duty and the cuts to mortgage interest relief, which are leading some landlords to consider their future in the sector, while others are committed to growing their portfolios.

"Portfolio and professional landlords continue to be focused on the opportunities available, and we believe that a combination of landlord ambition and the fact that our focus on simplicity appeals to advisers and their clients, are fundamental reasons why we are seeing an increase in applications in this area."

At the start of this week data from UK Finance, formerly the Council of Mortgage Lenders, revealed there were 6,600 new buy-to-let house purchase mortgages in November, some 1.5 per cent less than in the same month a year earlier. 

There were also 13,500 new buy-to-let remortgages in the month, some 3.6 per cent less than in the same month a year earlier. 

By value this was £2.1bn of lending in the month, 4.5 per cent down year-on-year.

Paul Smee, head of mortgages at UK Finance, said declines in buy-to-let lending reflected the changing regulatory and fiscal environment for landlord businesses, where some landlords might be inclined to reappraise the viability of their portfolios.