Underwriting standards for buy-to-let mortgage contracts

Supervisory Statement 13/16
Published on 29 September 2016


This supervisory statement (SS) is relevant to all firms regulated by the Prudential Regulation Authority (PRA) that undertake buy-to-let lending that is not already subject to Financial Conduct Authority (FCA) regulation. The PRA expects regulated firms to ensure that the standards contained in this SS are adopted by other firms undertaking buy-to-let lending within their groups.

The purpose of this SS is to:

(a) outline the PRA’s expectation of minimum standards that firms should use to underwrite buy-to-let mortgage contracts; and

(b) clarify the PRA’s expectations in relation to the application of the small and medium-sized enterprise (SME) supporting factor on buy-to-let mortgages.

Firms should meet the principles and expectations set out in this SS on a phased basis, as follows:

(a) regarding ICR tests (including the impact of the personal tax changes) and interest rate affordability stress tests, by 1 January 2017; and

(b) the remaining expectations by 30 September 2017.

Firms should contact their supervisor if they consider that circumstances exist which suggest a divergence from the timescale above on any of the expectations. 

PDF Supervisory Statement 13/16 

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