From 1st October 2017, Keystone will increase the Classic Range procuration fee paid to brokers by 10 basis points.
The rise is being introduced in recognition of the increased workload which brokers will have to undertake in light of the PRA’s new guidelines on underwriting buy to let mortgage applications from portfolio landlords.
Crucially, the increased proc fee will be applied to all Classic Range cases even if the client does not meet the portfolio status definition.
The PRA defines a portfolio landlord as a borrower with four or more distinct mortgaged buy to let properties, either together or separately, in aggregate.
From October, lenders will be required to adopt a specialist underwriting approach which includes gathering more detailed information than lenders may have previously requested.
Commenting on the PRA’s requirements, David Whittaker, CEO of Keystone said:
We’ve always focused on the more professional landlord with complex borrowing requirements, so in a sense, it will be business as usual for us as we already take a specialist approach to underwriting.
However, we are mindful that the PRA has created a clear distinction between portfolio and non-portfolio landlords, and as such, we will have different underwriting policies for both.
In practice, this means that Keystone may request more detailed information from portfolio landlords to help make the appropriate lending decision. For brokers this will mean that they will have to spend considerably more time working closely with their clients to collect and collate the necessary paperwork before being able to submit a case.
Mr Whittaker added:
As a lender, it’s important to us that we both acknowledge and reward the additional legwork being undertaken, and we will keep proc fees under review whilst the new processes are bedding in.
In the meantime, we are working hard to reduce the impact on brokers and landlords. We have some new tools in the pipeline to help streamline the process for brokers and we are determined to ensure that service levels are maintained as the market adjusts to the new environment.
Keystone will make further announcements on the new PRA requirements for portfolio landlords well before 1st October.