It is almost a year since the PRA issued its final underwriting standards for buy-to-let, meaning lenders must change the way mortgage applications are underwritten for portfolio landlords. Borrowers with four or more properties will be classified as portfolio landlords and subject to these standards.
With less than a month until the changes are implemented, concerns are increasing about the impact on landlords, particularly those just within the classification of portfolio landlords. A lot of this is fear of the unknown: not knowing exactly what hoops will have to be jumped through to secure the required lending.
It will certainly make the process more complex and time consuming but it is important not to get bogged down in the negative. I see it as good news for brokers because their skills will be in far greater demand. If we removed the complexity, lenders would all look the same, and what use would that be?
There will be a teething period as landlords get to grip with the different approaches but the most important thing is communication. What will be an absolute requirement to get over the line and what would simply help? If lenders are to maintain their relationships with brokers, helping to clarify these finer details will enable a far easier conversation between adviser and client.
Technology has been seen as a real threat to intermediaries, particularly given the desire of mainstream lenders to write more business directly. The more straightforward a case, the greater the chance the consumer will bypass the adviser.
But technology is not always the enemy and intermediaries can use it to streamline communication. We can also safely assume the BTL market will have more policy changes thrown at it, and face-to-face advice is often preferred by those wanting to iron out concerns.
I see the PRA rules as a friend, not a foe, to intermediaries. BTL started out as very specialist; it became more mainstream in the mid-2000s; and during the market downturn it was served only by a duopoly.
Now it is far more convoluted. But if there was a clear route to becoming a professional landlord, brokers would face more of a challenge to prove their value.
Jeff Knight is marketing director at Foundation Home Loans