What Is a Portfolio Landlord?
The PRA defines a portfolio landlord as any borrower who, at the point of making a new mortgage application, has four or more distinct mortgaged buy-to-let properties (in any combination of individual and company ownership). Properties owned outright (without a mortgage) do not count towards the four-property threshold. The definition applies regardless of whether the properties are mortgaged with the same lender or different lenders.
What the Portfolio Landlord Rules Require
When a portfolio landlord applies for a new BTL mortgage - whether for a new purchase or a remortgage - the PRA requires lenders to conduct a more thorough assessment than for a non-portfolio landlord. Specifically, lenders must assess the landlord's entire portfolio of mortgaged BTL properties, not just the property being mortgaged. This is called a portfolio-level stress test.
Portfolio-Level Stress Testing
The portfolio-level stress test assesses whether the aggregate rental income from the entire portfolio covers the aggregate mortgage payments - including the proposed new mortgage - at the stress rate (typically 5-5.5%). The total rent must cover the total stressed interest across all mortgaged properties at a minimum ICR of 125% (for basic rate taxpayers) or 145% (for higher rate taxpayers and Ltd Co borrowers). Properties where the rent does not cover the stressed mortgage payment create a portfolio-level shortfall - this shortfall must either be offset by other properties' surpluses or covered by the landlord's personal income (top-slicing).
| Borrower Type | Minimum ICR | Typical Stress Rate |
|---|---|---|
| Basic rate taxpayer | 125% | 5-5.5% |
| Higher rate taxpayer | 145% | 5-5.5% |
| Ltd Co borrower | 145% | 5-5.5% |
Documents Required for Portfolio Landlord Mortgage Applications
Portfolio landlord mortgage applications require significantly more documentation than non-portfolio applications.
- A schedule of all mortgaged BTL properties (address, current mortgage balance, lender, monthly payment, current rent, tenancy expiry)
- Evidence of rental income (tenancy agreements or letting agent statements)
- Current mortgage statements for all mortgaged properties
- Two years of personal and business accounts
- A business plan for the portfolio where the lender's policy requires it
Which Lenders Accept Portfolio Landlords?
Not all BTL lenders will lend to portfolio landlords. Some high-street banks and building societies cap their appetite at three or fewer mortgaged properties. The specialist portfolio landlord lender panel includes: Paragon Mortgages, Fleet Mortgages, Foundation Home Loans, Precise Mortgages, LendInvest, CHL Mortgages, and various specialist building societies. Each has different portfolio size limits, different portfolio stress test methodologies, and different income evidence requirements. A broker who specialises in portfolio lending knows which lender best suits your specific portfolio composition.
- Paragon Mortgages
- Fleet Mortgages
- Foundation Home Loans
- Precise Mortgages
- LendInvest
- CHL Mortgages
- Various specialist building societies