The purpose of this Supervisory Statement (SS) is to set out the Prudential Regulation Authority’s (PRA) expectations for minimum underwriting standards that firms should apply when offering buy-to-let (BTL) mortgage contracts. These expectations apply to lending that is not already regulated by the Financial Conduct Authority (FCA) and aim to ensure prudent credit assessments, regardless of whether the borrower is an individual or a company. The PRA’s focus is on the borrower’s ability to repay the loan, and firms are expected to adopt these standards as a baseline when assessing all relevant BTL contracts.
For the purposes of the SS, a BTL mortgage is defined as a loan secured on UK residential property (in pounds sterling), where the property is intended for rental and not for occupation by the borrower or related persons. The definition explicitly excludes corporate or commercial lending, short-term contracts (12 months or less), and “consent-to-let” scenarios. The expectations do not apply to remortgages with no additional borrowing, to avoid penalising existing borrowers. Overall, the PRA’s guidance aims to promote responsible lending practices within the unregulated segment of the BTL market.
Now let’s take a look at the changes in the 2024 version associated with the near-final Basel 3.1 changes compared with 2016 version.
Affordability Testing
There are no substantive changes in affordability assessment between the two versions. The interest coverage ratio (ICR) definition, the 125% minimum threshold, and the stress testing expectations (e.g. 5.5% floor rate, +2% interest rate rise assumption) are maintained without alteration. The use of personal income, the assessment of expenditure, and the treatment of high-net-worth borrowers remain identically framed, with no expansion or adjustment of requirements. No new affordability criteria or tone shifts are introduced in the 2024 version.
Portfolio Landlords
The definition of a portfolio landlord (≥4 mortgaged buy-to-let properties) is preserved in full. The PRA’s emphasis on complexity and tailored underwriting for this borrower segment is unchanged. The list of expected additional information lenders should obtain (experience, portfolio breakdown, assets/liabilities, business plan, and cash flows) is carried over verbatim. There is no alteration to policy tone, risk sensitivity, or scope. The 2024 update reiterates all expectations previously set out in 2016, with no additions or removals.
Risk Management
The 2024 version retains all the risk management controls outlined in 2016, without change in wording or structure. Firms remain expected to maintain:
- Internal risk appetite limits for BTL exposures,
- Oversight of third-party introducers,
- Monitoring of portfolio concentrations, and
- Fraud risk controls.
No new risks are introduced. The supervisory tone, requiring “adequate” controls, remains identical, signaling no shift in regulatory emphasis or supervisory expectations.
Deletion of SME Supporting Factor Guidance
The most substantial policy shift in the 2024 update is the complete deletion of Section 5 from the 2016 statement, which addressed the application of the SME supporting factor under CRR Article 501. In 2016, the PRA discouraged applying this capital relief to buy-to-let exposures, except in narrowly defined circumstances where the loan’s primary purpose was not property acquisition. The deletion of this guidance in 2024, reflects a deliberate narrowing of scope. It likely corresponds to broader regulatory changes under Basel 3.1, where capital treatment for such loans may now be dealt with separately. The removal indicates that capital guidance is no longer within the remit of SS13/16, and that the focus is solely on underwriting.
Deletion of Implementation Timescales
Another structural deletion in the 2024 update is the removal of Section 6 from the 2016 statement, which established compliance deadlines for introducing the underwriting standards. In 2016, firms were given specific dates (e.g. 1 January and 30 September 2017) to implement different elements of the guidance. The 2024 version omits any such timetable, reflecting that these standards are already operational. Instead, the 2024 statement specifies an effective date of 1 January 2027, in line with Basel 3.1 reforms. This marks a transition from a rollout approach to a codified expectation, indicating that the supervisory framework is now established and integrated into broader regulatory timelines.
Conclusion
The 2024 revision of PRA Supervisory Statement SS13/16 presents no changes to the substance or tone of underwriting standards for buy-to-let lending when compared with the 2016 version. The sections on affordability, portfolio landlords, and risk management remain verbatim, preserving definitions, thresholds, and supervisory expectations. However, two notable deletions narrow the scope of the updated statement: (1) removal of all guidance related to the SME supporting factor, and (2) elimination of implementation timescales.
These deletions reflect a shift in regulatory focus from capital treatment and transitional guidance to a pure emphasis on underwriting expectations, now embedded within a mature regulatory framework. The PRA’s unchanged tone across the remaining sections indicates that its supervisory posture has not softened, but rather that it is reinforcing clarity and alignment with wider reforms under Basel 3.1.