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‘Car crash’ expected in BTL market following PRA changes

The buy-to-let market is set to be a ‘car crash’ following the implementation of underwriting changes for portfolio landlords, according to an industry expert.

Speaking on a panel at the Financial Services Expo in London today, Mortgages for Business chief executive David Whittaker (pictured) said a combination of lack of knowledge among landlords and an absence of lender information would result in a host of issues from October 1, when the PRA initiated changes for portfolio landlords come into force.

“It’s going to be a car crash. Landlords don’t know about it and they’re going to say to advisers, ‘I don’t like what you’re asking me to supply and I’ll go somewhere else’. Four days later they’ll come back to you the adviser and admit you were right,” said Whittaker.

Whittaker chastised those lenders who were still to make their post-PRA processes and approach public knowledge.

“It’s a bit late in the day for lenders to be saying we’ll announce shortly,” he said. “I wish advisers all the best of luck on October 2 because there’s going to be a lot of white noise around the market.”

Connect Mortgages chief executive Liz Syms agreed that a number of lenders were not communicating effectively enough in this area.

Syms also advised brokers that lenders are interpreting the PRA rules in different ways, and to ensure that they are aware that a one size fits all will not work.

“Lenders are interpreting the PRA underwriting rules differently, for instance, the four mortgageable property rule to be defined as a portfolio landlord,” said Sims.

“Not every lender is interpreting this rule the same; some are including properties with no mortgage and advisers have to be mindful of this.”

One Savings Bank sales director Adrian Moloney argued that the ‘car crash’ might be more likely to be a “log jam”. He said: “There has been a lot of talk about heavy lifting in this sector and what we’ve tried to do is make it as light touch as possible. However, I still think there might be a log-jam.”

Together group intermediary relationships director Richard Tugwell said a combination of various changes in the BTL market, including stamp duty hikes, had caused disruption, but that it wouldn’t last.

“Post-PRA changes I think there will be a short-term dislocation in the market,” he said. “It was good that the changes were staggered but it has been seen as three whacks to the market.”



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  • John Scott 15th September 2017 at 6:14 pm

    It’s hard enough for brokers to make a living with mortgages in general but considering all the other changes in the BTL market now coupled with PRA changes I just can see how this can be viable. Brokers are going to be working for nothing if they continue in the BTL market and sometimes you just have to put your hands up and say enough is enough.

    This is no longer profitable and there are other areas where with nowhere near as much effort we can make more profit. SIMPLES leave it to someone else and move on

    • john barnes 20th September 2017 at 12:39 pm

      concentrate on protection sales