Standardisation within the lender market has always been something of a tricky ask, certainly when it comes to the introduction of new regulatory rules.
Over the years, lenders have often chosen to interpret new rules very differently – as is their right – however widely varying approaches does mean that advisers need to get to grips with multiple systems, processes and requirements.
You might have read recently about our concerns around the different lender requirements that will come into force post-30th September when the PRA’s underwriting changes for portfolio landlords are introduced.
We are talking a potential greater level of work on a large scale, and (I hate to say it) but one of the unintended consequences of these new rules is that some brokers might well, at least temporarily, step back from advising in this area.
Behind this we now have the detail from most lenders in terms of how they’re approaching the changes, and it’s clear that the greater level of work involved in garnering all the information they will now need to judge affordability and make the loan decision is going to test the most resilient and experienced of buy-to-let lenders.
As with Mortgage Market Review, the onus will be placed firmly on the broker side to ‘make it happen’ and this extra work is (for the most part) not going to be rewarded with greater procuration fee levels, although I understand that some lenders have said they’ll introduce this in order to match fee level to work.
That’s to be applauded, but again it’s not by any means a ‘standard’ response and, while there are of course some buy-to-let lenders not regulated by the PRA and therefore able to offer (one would hope) no changes, the bulk of market players will deliver the required changes.
It has been said that portfolio landlords should act before the end of September in securing finance in order to miss the changes, but we are almost past the point when this is feasible, and therefore we would like to see lenders attempting to make this transition as simple as possible.
Thankfully, technology solutions will emerge to help with these new, demanding and costly requirements – in fact one such system is currently being trialled by Paradigm firms… To me, it seems imperative that all affected lenders buy into such time-savers.
It’s in all our best interests to get this process right, to use the technology available and while there are bound to be teething troubles, one would hope that they are not numerous or cause brokers to look elsewhere for alternative business sources.
Bob Hunt is chief executive of Paradigm Mortgage Services