Lenders designate private landlords with four or more mortgaged buy to let properties as portfolio landlords. They are subject to more stringent lending criteria than landlords with fewer properties. This is called “stress testing”, which assesses the risk of being in default across the landlord’s entire rental “business”.
This means that lenders do not just consider a new mortgage in isolation. Instead, lenders assess the application in the context of the rest of the landlord’s portfolio.
The Prudential Regulation Authority introduced these rules “to curtail inappropriate lending and reduce the potential for excessive credit losses”.
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