Brokers have been urged to buff up on upcoming regulatory changes and their implications ahead of a looming deadline, ensuring their clients are ready to comply with the new rules.
Adrian Moloney, sales director at OneSavings Bank (OSB), says it is understandable that some brokers are still playing catch up with the Prudential Regulation Authority (PRA) changes but that need to act swiftly.
His comments come after a survey showed that just over half (54%) of brokers are comfortable that they fully understand what the changes for portfolio landlords entail, and what they will mean for their business.
The changes, announced last September, will see a new minimum underwriting standard introduced for landlords with four or more properties as of 1st October. Under the new rules, portfolio landlords, and their brokers, will need to provide detailed information on the cash flows and costs arising from multiple tenancies.
But with less than a month until the deadline, the survey of more than 200 buy-to-let brokers found that 46% still don’t understand everything they need to.
According to research from Kent Reliance, part of the specialist lending group OSB, one in 10 (13%) admitted that they were aware of the changes but not when they are coming into effect, while nearly a third (31%) had heard of the new rules but didn’t understand how to apply them to business.
Those brokers that are already in the know are optimistic about the opportunities the new framework will create. A third (29%) believe the PRA rules will increase future opportunities compared to 14% who think it will reduce overall buy-to-let transactions.
Whatever the eventual outcome, some teething pains are expected. A third (29%) anticipate that more applications will be rejected in the short term, a quarter (23%) believe the extra administrative burden will cause the application process to slow down, with just 4% predicting that it will have no impact at all.
And Mr Moloney said: “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 PRA deadline looming, now is the time to buff up on the new rules and make sure clients are ready to comply.
“The new standards are business-as-usual for us as a specialist lender, but we know that brokers are going to have a lot more work on their plates, so we’ve done everything in our power to make life easier. Whether that’s through communicating our new lending criteria well in advance of the changes, or developing a dedicated tech-platform, brokers ease of doing business with us remain a key priority of ours.
“For those that still don’t feel confident in what these changes mean for their business, the time to get on top of it is now and we would encourage them to contact us as soon as possible so we can make the transition into the new landscape seamless for their business.”