What are the portfolio landlord ‘rules’?

THE QUESTION

Just about to buy my fourth buy-to-let (BTL property, but I’ve been told by mortgage provider that this will mean I will become a ‘portfolio landlord’ and, therefore, will need to have at least 30% equity across the board & have 30% deposit for the new mortgage. Is this accurate? If it is, is there any way around it? I was led to believe that mortgage companies were happy to work to 80% Loan To Value? 

THE ANSWER

What is accurate is that Portfolio Landlords have their mortgage applications underwritten differently to those who aren't PL's.  How differently? Underwriters look at their portfolio holistically, rather than each property in isolation.

What is also accurate is that the Portfolio Landlord status is triggered by the acquisition of your fourth investment property.

Why PL and why four? Because the regulators that govern mortgage lenders say so - mortgage lenders are just obeying orders.

Where the accuracy diminishes is the requirement for 30% equity across your portfolio. Different lenders view this in different ways.

As with any mortgage underwriting, there is a divergence of opinion based on that particular lender’s attitude to risk. Some lenders are more risk averse than others and they offer the lowest rates.

If you want the cheapest rates, you generally have to accept the most stringent restrictions e.g. 30% equity. Be willing to endure higher rates and you won’t need as much equity clearance.

Also, as your portfolio grows, say to 10+ properties, expect the equity requirement to increase across all lenders.

As always, talking direct to a single lender gives you a myopic view of the market as a whole. Conversely, working with a broker gives a far broader appreciation of what is happening and what your options are.

You can learn more here:

• Contact Kevin Wright over on his Facebook page.
• Browse the Recycle Your Cash online training library by clicking here.
• Attend a 2023 Buy-Refurb-Refinance Summit event - BRR Summit