Buy to let mortgages – are you ready for the changes?

Terraced houses

- Salli Anstey

Buy to let mortgages – are you ready for the changes?
There have been a number of changes when it comes to buy to let mortgages over recent years and they are set to continue. In 2016 an additional 3% stamp duty surcharge was added onto the purchase of buy to lets and second homes. As well as this, April 2017 saw amendments to the amount of tax relief that landlords could get on their buy to let mortgages, which is still in the process of being phased in up to 2020. These changes have seen the majority of lenders making key adjustments to their underwriting process, meaning tougher affordability tests and higher stress testing on buy to lets in general.

The new underwriting rules have become a hot topic in the buy to let sector. But despite the importance of these changes, there has still been some confusion around how this will affect landlords, especially those who are now classed as ‘portfolio landlords’.

From last weekend, 30th September 2017, new underwriting standards come into effect. These changes come as part of the Prudential Regulation Authority’s (PRA) second phase and will see lenders change their approach for portfolio landlords.

I’m a landlord – how will this impact me?
This will only impact you if you have four or more mortgaged buy to let rented properties. If this is the case, you will now be considered a ‘portfolio landlord’ by lenders. The PRA will expect all firms who lend to ‘portfolio landlords’ to adhere to a specialist underwriting process that takes into account complex borrowing scenarios. Essentially this means that your entire portfolio of properties will need to be underwritten when you apply for a new buy to let mortgage – even if your other properties are with different lenders.

Put simply, previously, lenders would look at the individual property that you want a buy to let mortgage for and assess the viability on that property alone. Once the new standards come into effect, consideration will be given to your entire portfolio so if you have an existing buy to let that’s losing money you may find this will impact the decision on lending on the new property. There is concern that these new standards could ultimately reduce the availability of buy to let mortgages to portfolio landlords but this is yet to be seen.

How can I prepare?
If you are a landlord then the changes in the buy to let market over the last eighteen months are likely to impact you. At Private Wealth Mortgages we can help you review your current situation and assess how the changes could affect you now and in the coming years. We will look at all the options available to you, ensuring your investment is protected.

For more information get in contact with the Private Wealth Mortgages team on 01403 270006.


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Private Wealth Mortgages Ltd is authorised and regulated by the Financial Conduct Authority. FCA Number: 445980

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