New rules for lending to landlords who have larger property portfolios are due to come into effect later this year, changing the checks that brokers need to undertake when it comes to lending for the purposes of buying rental homes.
However, in spite of the fact the rules were first announced in 2016, nearly half of all specialist buy-to-let brokers understand what the new criteria are and what it will mean for their own business practices after October.
According to a study by OneSavings Bank, only 54 per cent of those brokers surveyed said they fully understand what the new rules will entail, both for portfolio holding landlords and themselves. But 46 per cent remain in the dark, with 31 per cent saying they do not know what the new criteria are, and 13 per cent even saying they had no idea about when they will come into play.
Shockingly, two per cent of brokers have not heard anything about the change to the rules at all.
Under the new rules, landlords who have a portfolio of more than four properties will face even more scrutiny when they try to obtain further buy-to-let mortgages. Brokers will have to provide detailed data about each of the properties in their portfolio, including cash flow information and the associated costs of running multiple tenancies.
"Brokers have had to get to grips a with a huge amount of regulatory change over the past 18 months including seismic changes to mortgage tax relief and stamp duty, so it’s understandable that some are still playing catch up, but with the deadline looming, now is the time to buff up on the new rules and make sure clients are ready to comply," said Adrian Moloney, sales director at OneSavings Bank.
Those who are aware of the implications of the changes are foreseeing big changes for their operation, including more administrative work. However, they also say there is a much better chance that it will mean a greater number of opportunities.