Portfolio landlords struggling for finance

Portfolio landlords struggling for finance

Almost three-quarters of portfolio landlords have had difficulties securing a mortgage since a change to how they are regulated was introduced last year.

Research from Foundation Home Loans found portfolio landlords – those with four or more properties – have had a harder time getting finance in recent months.

New regulation, which came into effect in September 2017, has changed the way buy-to-let mortgage applications are underwritten for portfolio landlords. Portfolio landlords are now required to submit a business plan as part of the new standards.

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Foundation Home Loans marketing director Jeff Knight said: “Whether these figures are a natural period of adjustment or the new norm remains to be seen. Brokers and lenders must work together to ensure things do not become unnecessarily challenging.”

But the new rules are not just affecting professional landlords either. Half of those with between one and three buy-to-let mortgages also said obtaining finance had been a challenge.

Two thirds of those who own 11 or more properties are concerned the range of products available to them will be reduced. Meanwhile, 28 per cent worry their mortgage application is more likely to be rejected as a result of the changes.

David Hollingworth, associate director at London & Country Mortgages, said: “It was inevitable that landlords would need some time to adjust to this new approach and they will have to expect more questions around their portfolio.

“Having detailed information on their portfolio and existing borrowing would be helpful preparation when applying for a mortgage and will certainly ease the process. This should become easier as landlords become used to the new approach and some lenders look to use technology to help smooth the way in the future.”

Jeff List, head of buy-to-let at Brightstar, said: “Portfolio landlords are definitely finding it difficult to secure mortgages under the new regulations.

“We would advise those seeking a mortgage to work closely with a specialist broker and tax adviser and be prepared for the increased level of documentation now required.”