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The PRA is beginning to bite and the second phase, affecting portfolio landlords, will become embedded this Autumn.It is therefore going to be harder to grow a portfolio and scale up as quickly as landlords were able to do over the past 10 years.Stephen Johnson, M.D. of Shawbrook Bank, gives an overview of the environment and issues facing landlords wishing to grow their portfolios:I thought it would be helpful to curate all our discussions on this topic.How to grow a property portfolio How to go big in property? Property journey & scaling up via mixed use Property investment course for scaling up Nicole Bremner on scaling up in 2017 How to move from residential to commercial? Advice on growing portfolio Tips for recycling your cash to build a portfolio more quickly Large equity - how can I get it out for BTL? The power of owning a property with no mortgage on itRemember that the new deal stacking calculation used by most lenders is now:Monthly rent x 12 divided by 5.5% divided by 145%.This could significantly reduce the amount of equity you can re-cycle via BTL mortgaging.For refurbs and development, you really need cash and then move to term finance or sell, hopefully re-cycling most of your cash.SEE ALSO - Understanding the impact of PRA on landlordsUP NEXT - Additional borrowing - Got less than I hoped!DON'T MISS - How to find property value through planningNOW WATCH: (Video recorded January 2017):
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
New addition:Buy one or many properties for same £ outlay?
so using the above calculation £450 a month is around £62000 Mortgage
have I got that right ?
Learn Change and Adapt ?????
No - £450 rent per month would support a borrowing of approx. £67,700 by my calculations.See - Ready-made deal stacking calculations
That's even better
well I don't have any probs with PRA
Just got to cope with S24 now
But I can see this causing such issues for others and there plans for their lives.
The PRA will have the same effects as MMR.
It is just the new reality.
It will mean the same as homebuyers that LL will now require a lot more cash to put down as a deposit.
So instead of buying two BTL properties only one will be affordable.
The PRA is effectively doing what MMR has done.
Forcing buyers to inject far more cash into the deal or 'skin in the game', as the slang often used!
Essentially lenders are requiring far more headroom to ensure that they will he guaranteed to recover the mortgage debt from any forced sale of the mortgaged property.
You can see it from their position.
I would require the same.
It is certainly not certain that property values won't reduce.
There are so many clouds on the horizon.
Lenders will be requiring more deposit.
They have every right to desire this.
It is their business choice.
Just adding this useful resource:Top 12 Property Tribes refurbishment resources for developers