The Bank of England’s Prudential Regulatory Authority (PRA) intends to establish a standard definition of what constitutes a ‘portfolio landlord’.
Under proposals in its latest Consultation Paper (CP 11/16), a landlord would be considered to be a portfolio landlord where they have four or more mortgaged buy-to-let properties across all lenders in aggregate.
The PRA says its data show that there is an increase in observed arrears rates of landlords with buy-to-let portfolios of four or more mortgaged properties.
The PRA is expecting that firms conducting lending to portfolio landlords do so according to a specialist underwriting process that accounts for the complex nature of the borrower and their portfolio of properties.
The supervisory statement follows a PRA review of underwriting standards in the buy-to-let sector which covered 31 firms (c.92% of the market). This review highlighted concerns about lenders’ growth plans and how they might meet them.
The Consultation Paper can be found here.
