What is a Portfolio Landlord?

Landlords who own four or more BTL investment properties are generally described as ‘portfolio landlords.’ It is important to note this distinction as rules were introduced by the Bank of England in 2017 which made it difficult for these investors to access additional finance.

Landlords who own 3 or less properties are usually classed as ‘private landlords’ and will require normal buy-to-let mortgages.

Sole Borrowers & Joint Borrowers

When an individual owns 4 or more properties (sole borrower), they are classed as a portfolio landlord. However, if two or more people have joint legal ownership of a property, then each person will be counted separately and their total number of properties is added up. This will determine if they are classed as ‘portfolio’.

For example, if there are two applicants on a buy-to-let property, one of whom solely owns 2 properties and if the other individual owns merely just one then this new property will be classed as their fourth. They would now be classed as portfolio landlords.

Portfolio Mortgages

Portfolio mortgages sit in-between buy-to-let mortgages and commercial mortgages. They’re almost always interest-only like normal buy-to-let mortgages because they’re still for buy-to-let properties.

This includes holiday lets, properties owned through a limited company, BTL mortgages owned solely or by the applicant and consent to let properties.

Mortgage Lenders and Portfolio Mortgages

Some mortgage lenders may have their own internal cap on the number of properties an individual can own, or the total amount that can be borrowed across the portfolio. This is usually determined on a case-by-case basis.

Most mortgage lenders that offer buy-to-let mortgages are regulated by the Bank of England’s Prudential Regulation Authority (PRA). In September 2016, the PRA issued several rules to introduce new underwriting standards for these lenders, including stricter affordability tests and extra checks on portfolio landlord mortgages.

Portfolio Landlord Stress-testing

When applying for finance, portfolio landlords need to ensure they show their mortgage details, cash flow projections and business models for each property they own. There are regulations in place which can make it harder to obtain funds for people with a heavily mortgaged portfolio.

At Town and Country, we have specialist mortgage brokers with experience arranging various types of landlord mortgages. Contact us and we’ll get in touch.