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What Were the
PRA Changes?

The Prudential Regulations Authority changes introduced new underwriting requirements for buy-to-let landlords with four or more mortgages properties (Portfolio Landlord) in a bid to improve accountability.

This means that applying for BTL funding as a Portfolio Landlord became a more timely process with such landlords required to provide more detailed information on the properties they own.

What Are the Effects of the PRA Changes?

A study by a leading specialist lender, found that more than half of brokers (52%) have used specialist lenders more frequently since the PRA changes came into force. Whereas almost a third (30%) have started using specialist lenders for the first time, or intend to do so.

In our experience, landlords are struggling to adjust to the changes and those with more then four are having the most difficulty.

A spokesperson for a leading specialist lender stated:

“Specialist lenders are uniquely placed to offer greater flexibility than traditional high street providers, so it’s perhaps not surprising that many brokers have turned to specialists in the months following the PRA regulation changes.

“Although it was always going to be the case that the administrative burden of the PRA regulation would be most harshly felt by brokers and their portfolio landlord customers, many we spoke to in the lead-up to the changes told us that they felt underprepared for its implementation.”

This goes to show that getting the right advice is so important in a specialist lending world

Should Portfolio Owners Buy as Part of a Limited Company?

This is a question that is being asked more frequently. Precise Mortgages, a specialist lender with great experience of this market, stated that two out of five landlords intend on using limited companies to buy properties over the next year compared to just over a quarter as individuals.

There are pros and cons to all transactions and a client has a decision to make as to the most appropriate course of action to their needs, however, notwithstanding this fact, the market expectation is that there will be an increase in the number of landlords that choose this model to operate within. There will be a number of reasons for this and it may just come down to tax breaks that may be available via this format.

Don’t leave it to chance?

To ensure that you make the informed choice that you are entitled to, talk to a CDMB adviser today.

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