The rule changes brought by the Prudential Regulation Authority (PRA) that take effect from September 2018 have caused several problems to buy-to-let property investors. The portfolio landlord rules have become much more complex due to changes made by the PRA.
The new PRA Law change puts a burden on all portfolio landlords as the law requires mortgage lenders to implement a special underwriting process for portfolio owners who have four or more buy-to-let properties. This may make it hard for borrowers to acquire funding and even more so if they own properties with a negative cash-flow position.
Under the new underwriting process, in addition to liabilities, assets and tax liabilities, lenders should also consider the experience of landlords, their portfolio track record, outstanding mortgage and rent. The new law will demand that lenders assess a landlord’s full property portfolio before deciding which mortgage deal to offer and the merits of new lending must be considered by the lender in accordance with the portfolio spreadsheets, cash flow forecasts and business plan of the landlord.
Due to these changes, landlords who may consider adding to their real estate portfolio and buy in London and perhaps other locations around the UK, must now go through a harder process on their next purchase. The question is, what could portfolio landlords do to protect their property portfolio from incapacitating damage from the new PRA Law change?
Portfolio landlords should discuss their individual situation with their accountant or a financial expert. They will likely ask the landlords to ensure that they have a clear position of the condition of all their properties.
The accountant or financial expert will prepare the landlord and provide lenders the one place to view all the information they need to evaluate the portfolio of landlords and also assist landlords in preparing for one-to-one meetings with their lender.
If you believe this is an area where you need advice and assistance, contact us on + 44 (0) 207 993 4081 and by email info @ stonelinkinternational.com and we will refer you to our Finance Team who will be able assist.
Portfolio landlords should organise to meet with their lender and ensure the lender understands their situation. A strong relationship with the lender will help portfolio landlords meet their portfolio objectives whether it is capital growth, generating income and clear exit plans ahead of the September deadline.
Remember, prepare the details with your financier (point 1) ahead of meeting with your lender. The lender’s criteria and the way they see your portfolio has changed and lenders are already training in preparation for this new law for September.
Portfolio landlords who wish to navigate through the new PRA Law changes should also meet with a Stonelink International real estate broker. A financial expert can provide advice to re-distribute the capital and wealth while the lender may show portfolio landlords a way to re-mortgage the property through a re-valuation. On the other hand, your personal real estate broker can provide advice to on-sell the property.
The team here at Stonelink International are on hand and happy to assist with the valuation and sale of the property, should you decide to take this option. Contact us on + 44 (0) 207 993 4081 and by email info @ stonelinkinternational.com and we will assist.
It is very important to be prepared for what’s coming ahead, especially if you have a portfolio of four (4) or more properties. If you are a landlord and are worried about changes imposed by the PRA Law and need more information and advice about how you could mitigate the impact of this legislation, contact Stonelink International, London’s Real Estate Broker, for further assistance on + 44 (0) 207 993 4081 and by email info @ stonelinkinternational.com