Significant numbers of buy-to-let investors are still unaware of how regulatory changes could impact their ability to borrow or refinance their property, according to the latest broker survey by Shawbrook Bank.
The bank’s ‘Broker Barometer’ highlights the need for more client education on rule changes imposed by the Prudential Regulatory Authority in September 2017.
Surprisingly, 28 per cent of the brokers surveyed said their clients were completely unaware of these rule changes.
A further 61 per cent reported that their clients were aware of these changes, but lacked sufficient understanding of them. In particular brokers cited “knowledge gaps” as to how these rules affected underwriting standards for buy-to-let properties.
Clients may be unaware of these regulatory changes, but brokers listed the “knock on effects of the PRA/FCA regulations” as the top issue likely to impact clients this year.
However, brokers surveyed reported that this regulatory change is having a positive impact on business, with 44 per cent saying that since September they have seen an increase in portfolio landlords approaching them.
A further 58 per cent of brokers believed these changes will help their business – particularly as landlords seek further guidance on the changes. This highlights the value placed by investors on specialist professional advice.
Shawbrook Bank’s managing director of commercial mortgages, Karen Bennett says: “This survey highlights the critical need for more education in the investor market regarding the impacts of regulatory change.
“The benefits of increased awareness are two-fold. Firstly it should help prevent clients from sleepwalking into a problem and allow them to adjust their investment strategy accordingly.
“Secondly, according to our research, brokers are also seeing increased enquiries from landlords which demonstrates that there are still opportunities for business growth.”
These PRA changes split broker clients into two camps: the first being those with three or less mortgaged buy-to-let properties, and the second being “portfolio” landlords with four or more rental properties.
It is this second camp are more impacted by the new requirements.