New PRA guidelines for buy-to-let landlords came into effect on 30 September. However, 46% of those affected are yet to grasp the full extent of preparations required.
According to a survey of over 200 buy-to-let landlords conducted by OneSavings Bank:
- 31% were aware of the changes but didn’t understand how to apply them
- 13% were aware of the changes but not the implementation date
- 2% hadn’t heard anything about the changes
29% thought the new PRA guidelines for buy-to-let landlords would lead to the rejection of more applications in the short term. A further 23% believed additional admin will slow down the application process.
What’s needed to meet new PRA guidelines for buy-to-let landlords?
Under these new rules, ‘portfolio landlords’ (those with four or more separately-mortgaged rental properties) may be required to submit extra information. They may also receive additional checks.
To meet new underwriting standards, lenders may choose to evaluate:
- Portfolio and experience
- Assets and liabilities (including outstanding mortgage balances and future tax implications)
- Business plans
- Cash-flow statements
Landlords will also face an affordability assessment (relating to their personal income) and rental income check (regarding current and future rental rates).
Despite the overall lack of prior knowledge, many of those surveyed felt positive about the effect these changes will eventually have. However, landlords who fail to prepare could quickly fall foul of these new rules.
Find out more about the latest financial factors set to impact the buy-to-let market by calling on the friendly 3 Wise Bears team.