New underwriting standards now apply to portfolio landlords, as part of the Prudential Regulation Authority’s (PRA) oversight of the market.

A portfolio landlord is defined as someone with interest in four or more distinct mortgaged buy to let properties, which could be buy to let properties that are solely or jointly owned by the applicant, or by a company in which the applicant has a share or a combination thereof.

Where an applicant does meet the portfolio landlord definition, lenders will need to apply a specialist underwriting approach, which will evaluate the landlord’s portfolio and experience, their assets and liabilities and their business plan.

At Castle Trust Capital, we have always specialised in lending to portfolio landlords and our existing approach is already closely aligned with the standards required by the PRA. This means that you are unlikely to notice much difference in the way we handle these applications. Nevertheless, for the sake of good order we detail below the approach we take to assessing your portfolio landlord cases.



Underwriting

We will ask you to complete a Portfolio Landlord Statement for your client. This is an existing document and includes an asset & liability statement, property schedule and business plan.

Essentially, our underwriters will apply a stress test to assess the position of the entire portfolio. Where there is a shortfall, we will take a view depending on how many properties this affects, the strength of the portfolio and the broader financial circumstances of the applicant.

The information provided in this document may be validated with credit bureau checks and will be used to:

•             Assess the quantum of debt in aggregate

•             Consider any potential concentration risks

•             Review the business plan, assets and liabilities

•             Confirm sufficient rental income to cover costs. 

Portfolio rental calculations

These are the rental calculations that we will use to stress test a portfolio:

Limited Companies

125% at 5.5%

Individual applicants 

1-year term

130% at 5.5%

2-year term

135% at 5.5%

3-year term

140% at 5.5%

4-year term

145% at 5.5%

5-year term

145% at 5.5%


Holiday lets are always subject to a 150% stress test at the relevant pay rate.

Any questions?

If you have any questions about our approach to portfolio landlords or a case to discuss, please call us on 0345 241 3079.



Mortgages

This website is for authorised intermediaries only. This information has not been approved for use with customers and is not intended for public or customer use. Your clients’ property may be repossessed if they do not keep up repayments on a mortgage or any other debt secured on it. Loans are subject to status, terms and conditions.

You will incur the same call costs as if you were calling an 01 or 02 landline, which are often included in your monthly allowance. Your calls may be recorded or monitored for training purposes.

Castle Trust is the trading name of both Castle Trust Capital plc (company number 07454474) and Castle Trust Capital Management Limited (company number 07504954). Castle Trust is authorised and regulated by the Financial Conduct Authority, under reference numbers 541910 and 541893. Registered office: 10 Norwich Street, London, EC4A 1BD. Registered in England and Wales.

© 2018 Castle Trust. All rights reserved.

This website is for authorised intermediaries only. This information has not been approved for use with customers and is not intended for public or customer use. Please confirm that you are an intermediary before accessing information on this website.

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