Large Portfolio Landlords May Struggle to Find a Mortgage

Landlords who own four or more investment properties in a large portfolio could struggle to find a mortgage under harsh new checks from banks.

Research from Money Mail found that three separate lenders: Santander, Principality BS and Platform, a subsidiary of The Co-operative, have all stopped accepting mortgage applications from landlords with over four homes in their portfolio. The changes come as a result of new rules introduced by the banking watchdog.

The new rules mean that from September 30, lenders will need to carry out strict checks on landlords with who have a large portfolio. Previously, banks and building socieities were able to assess an application for a buy to let loan based on its rental income and the value of the property they are lending against. This is set to change at the end of September with every portfolio landlord who applies for a new loan set to face a grilling about all of the properites they own.

Approximately 11 per cent of UK landlords have four or more properties, according to UK Finance, the trade body for banks. Of those, it is only landlords with mortgages who are affected, amounting to 100,000 investors.

Whilst some banks have opted to turn away potential borrowers, others have insisted that landlords charge more rent and demand bigger deposits in order to protect themselves in case tenants refuse to pay. Other banks have taken a different approach, demanding business plans from landlords and raising their minimum salary requirements.

David Hollingworth, of mortgage broker L&C Mortgages, said: ‘It’s pretty clear that landlords with multiple properties are going to find it much more difficult to get a mortgage. What is worrying is that this could force landlords to increase their rents. That will be very painful for their tenants. It is yet another blow for landlords, who have been hit with two big tax hikes in the past year.’

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