Ahead of the Prudential Regulation Authority's (PRA) changes to portfolio landlord underwriting standards, we wanted to give you the confidence in knowing that we’ll remain committed to supporting portfolio landlords.
And with the regulatory changes coming into effect on 30 September 2017, we recognise the need to provide clarity as early as possible. So, to help support you and your clients with their longer term planning, we’re sharing as much information as we can right now, covered in the key points below.
We’ll also be updating this page over the coming months with additional details when we can confirm them, including the date that we’ll be implementing the changes.
- A borrower with four or more distinct mortgaged Buy to Let rental properties.
This includes any applications currently in progress with TMW, regardless of LTV.
We don’t consider foreign properties when assessing portfolio landlords.
We’ll continue to accept portfolios of all sizes, with no limit to the number of properties accepted.
All portfolio landlord applications will be subject to an affordability assessment (including properties not mortgaged with TMW) to validate the level of BTL borrowing and rental cover. For portfolio landlords an Interest Cover Ratio (ICR) of 145% will apply to any new applications, regardless of your client’s tax status. The minimum ICR for Houses in Multiple Occupation (HMO) will remain at 170%.
There'll be no changes to the following:
We'll now ask for your client's income on all cases at Decision in Principle (DIP). Proof won't be asked for in all cases, but where it is needed it'll be asked for by the underwriter at application.
At DIP we’ll identify if your client is a portfolio landlord by asking for the number of mortgaged properties in your client’s portfolio on completion of the TMW mortgage being applied for. Then, if your client has 4 or more mortgaged properties, we’ll ask for details of the total value, rental income and outstanding mortgage balances secured against the portfolio.
We’ll ask for three months' personal bank statements and a property schedule for all portfolio landlord applications to assess the risk associated with your client's properties. To ensure that we can process your portfolio landlord cases in the most effective way, we’re investing in a new online solution that will allow you to populate the portfolio property details, which will then be validated automatically and the results sent to our dedicated team of portfolio underwriters for assessment.
And depending on the complexity of the case and size of the portfolio, for a limited number of cases, we may request further supporting information. For example, in some cases we may need to ask your client for:
- Income proof
- Asset and Liability statement
- A Business Plan that outlines details such as:
- How long the properties have been owned?
- The landlord’s current approach and future plans of portfolio management
Any information needed will be requested following submission of the application.
So your case can be processed efficiently, please continue to ensure you submit all requested proofs.
Once the changes have been implemented, procuration fee payments for portfolio landlord cases will remain the same as non-portfolio landlord cases. For more information on procuration fees, click here.
We're here to help
We’re aiming to give you as much detail as early as we can. In the meantime, we’ll continue to work with you to understand what you’d like covered in the run up to the changes, and you can tell us what you’d like to know by submitting a question to us.
Remember, your BDM is available to help you through these changes and will happily discuss any support or training you may need which can then be planned in nearer the implementation date.