David Whittaker of Mortgages for Business warned the audience at a Financial Services Expo (FSE) London seminar that a combination of a lack of lender information, landlords’ lack of knowledge on the upcoming PRA changes to buy-to-let underwriting, and the increased workload for advisers, would mean a particularly difficult time for all.
Whittaker (pictured) said: “It’s going to be a car crash. Landlords don’t know about it and they’re going to say to advisers, ‘I don’t like what you’re asking me to supply and I’ll go somewhere else’. Four days later they’ll come back to you the adviser and admit you were right.”
Whittaker chastised those lenders who were still to make their post-PRA processes and approach public knowledge. “It’s a bit late in the day for lenders to be saying we’ll announce shortly,” he said. “I wish advisers all the best of luck on October 2nd because there’s going to be a lot of white noise around the market.” He was also critical of those lender “awkward so-and-sos” who were still using Word or pdf documents when it came to working through landlords’ portfolios.
Liz Syms of Connect Mortgages agreed with Whittaker that a number of lenders were not communicating effectively enough in this area, and she also had a warning for advisers in terms of dealing with different lenders. She said: “Lenders are interpreting the PRA underwriting rules differently, for instance, the four mortgageable property rule to be defined as a portfolio landlord. Not every lender is interpreting this rule the same; some are including properties with no mortgage and advisers have to be mindful of this.”
Adrian Moloney of One Savings Bank argued that the ‘car crash’ might be more likely to be a “log jam”. He said: “There has been a lot of talk about heavy lifting in this sector and what we’ve tried to do is make it as light touch as possible. However, I still think there might be a log-jam.”
Richard Tugwell of Together said that the cumulative effect of the recent changes – stamp duty increases, initial PRA underwriting changes and portfolio landlord changes – were significant. “Post-PRA changes I think there will be a short-term dislocation in the market,” he said. “It was good that the changes were staggered but it has been seen as three whacks to the market.”
Not everyone however saw a bleak future for the market because of the greater requirements of the PRA changes. Louisa Sedgwick of Vida Homeloans said: “Advisers will of course need more information from their customers but this should actually give you more opportunity to offer them more products and services. The greater complexity that has come does mean more opportunity for advisers.”