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Buy-to-let lenders react to incoming tax changes – Ying Tan’s Market Monitor

by: Ying Tan, managing director, Buy to Let Club
  • 26/05/2016
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Buy-to-let lenders react to incoming tax changes – Ying Tan’s Market Monitor
What a month that was. Mortgage lending may have levelled out following the rush to beat the Stamp Duty deadline, but lenders have certainly been keeping us busy when it comes to criteria changes.

TMW became the first lender to do the inevitable and hike its rental coverage requirement from 125% to 145%. It was quickly followed by Foundation Home Loans which announced it will also be increasing its stress-test ratio for personal buy-to-let customers from 125% to 145% from 14 June and Barclays which will also raise its requirement from 135% to 145%.

Meanwhile, Nottingham Building Society announced it was to increase its stress rate from 5% to 5.5%.

There was a welcome development from Accord which revealed it would now offer buy-to-let loans on properties worth £75,000 and above, rather than its previous minimum value of £100,000. Accord’s buy-to-let commercial manager said the lender had listened to broker feedback and predicted the move would be good news for those landlords in the North and Midlands where property prices are generally lower than in the rest of the UK. Amid the rental calculation re-evaluations, more of which are likely to follow, properties with high yields (usually with lower values) will become more popular and Accord is wise to capitalise on this.

There were changes for self-employed borrowers from Metro Bank which announced affordability will now be assessed using an average of the last two years’ profits supported by the most recent two full sets of annual accounts.

Finally, Kent Reliance revealed it would be reducing rates across its buy-to-let mortgage range while combining its standard and specialist ranges. The move means brokers will now have access to the same range irrespective of whether their client is purchasing a single residential unit, multiple leaseholds under one freehold, an HMO, or purchasing via a limited company.

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