Specialist Lenders Grow in Popularity Following PRA Changes

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New guidelines for portfolio landlords by the Prudential Regulations Authority (PRA) have resulted in more mortgage brokers using specialist lenders for the first time.

Data from specialist lender Kent Reliance, part of OneSavings Bank, 52 per cent of the brokers surveyed said that they have used specialist lenders more frequently following the implementation of the PRA changes in October 2017.

Almost a third of brokers have started using specialist lenders for the first time or have intentions to do so.

Approximately one in five brokers have said that the new PRA guidelines have encouraged them to begin using specialist lenders more often. A further 11 per cent say that they plan to use specialist lenders more frequently in future.

The new PRA regulations introduced new underwriting requirements for buy to let landlords with four or more mortgaged properties. They also require landlords to provide detailed financial information on the properties within their portfolios.

This has led to confusion in the sector as landlords struggle to aclimatise to the new requirements and the effect that they might have on their businesses. 44 per cent of brokers have stated that their landlord clients are having difficulties adjusting to the changes, whilst 34 per cent say that those with four to six properties are having the most difficulty adjusting.

OneSavings Bank sales director Adrian Moloney said: ‘Specialist lenders are uniquely placed to offer greater flexibility than traditional high street providers, so it’s perhaps unsurprising that many brokers have turned to specialists in the months following the PRA regulation changes. Although it was always going to be the case that the administrative burden of the PRA regulation would be most harshly felt by brokers and their portfolio landlord customers, many we spoke to in the lead-up to the changes told us that they felt under-prepared for its implementation.’

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