Our response to the PRA's Buy-to-let underwriting standards consultation

The BSA has responded to the Prudential Regulation Authority's (PRA) Buy-to-let underwriting standards consultation, which looks to introduce tighter underwriting standards for buy-to-let lending, in particular landlords with 4+ properties.
The Prudential Regulation Authority's (PRA) consultation on Buy-to-let underwriting standards closed on 29 June 2016. The consultation's main focus was on introducing minimum standards for affordability on buy-to-let underwriting and in particular that buy-to-let borrowers with 4+ properties should be classified as Portfolio Landlords and that lenders should employ a specialised underwriting process for these borrowers.

The BSA argued in its response that:
  • Evidence needs to be provided as to why the 4+ property threshold has been chosen for the classification of Portfolio Landlords, and that;
  • Measures need to be taken to ensure that the market is not exposed to regulatory arbitrage by the fact that those buy-to-let lenders only regulated by the Financial Conduct Authority (FCA) will not be bound by the PRA's buy-to-let underwriting standards.
BSA response to the PRA's buy-to-let underwriting standards consultation