Buy-to-let
Accord Buy To Let has its lending criteria for portfolio landlords ahead of stricter underwriting standards set to be introduced by the Prudential Regulation Authority in September.
According to the new PRA rules, portfolio landlords with four or more rental properties will be subject to stricter checks on income and debt from 30 September.
Accord, which is part of Yorkshire Building Society, will assess the financial strength and competency of a portfolio landlord by taking into consideration their experience in the buy-to-let market, their full property portfolio and any outstanding mortgages along with their assets and liabilities.
Accord’s existing rental calculations will apply for new borrowing. All background properties must collectively meet a minimum rental calculation of 135% interest coverage ratio (ICR) at a stressed rate of 5%.
There will be no changes to loan to value (LTV) limits, maximum loan size or minimum income criteria, while stress rates and the number of properties accepted will remain the same.
Chris Maggs, Accord Buy To Let’s commercial manager, said: “With so many changes happening to the buy-to-let market recently we believe it’s important to be transparent about our changes to criteria so brokers and landlords have time to prepare ahead of the new rules.
“We’ve tried to make our portfolio lending criteria as simple and straight forward as possible. In addition to our standard criteria, portfolio landlords will be required to supply details of any applications currently being processed with other lenders and complete an assets statement.
“We will also ask these landlords if they anticipate any financial changes or changes in circumstances which could impact the affordability of their portfolio.”
Landlords have been hit by a raft of changes in recent years as part of the Government’s plan to rein in buy-to-let investment.
Last year, the Government increased stamp duty on second homes by 3% to help free up property for first-time buyers.
Mortgage interest relief for residential buy-to-let properties was reduced to the base income tax rate – which is 20% – in April. Landlords were previously able to claim tax relief on the top rate of tax of up to 45%.
The change means landlords will no longer be able to deduct mortgage interest payments or any other finance-related costs from their turnover before declaring their taxable income.
The Bank of England’s Prudential Regulation Authority also introduced tougher underwriting standards and affordability assessments on 1 January to make sure borrowers can cover the cost of their mortgage in the event of an interest rate rise.
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