The revised calculation or the interest rate of the selected product if it is higher will apply to all applications regardless of the loan-to-value or loan amount.
Applications submitted prior to Friday’s deadline, where a decision-in-principle accept decision has been given, will be processed using the 5% rate of interest.
A spokeswoman from Accord said: “The increase in our buy-to-let rental calculation ensures we maintain robust affordability criteria, taking into consideration potential for mortgage interest rate increases in the future. The change will ensure we continue to remain competitive in the buy-to-let market.”
Andrew Montlake, director of Coreco, said the this change would make it more difficult for landlords particularly in lower yield areas like London.
Barclays, which increased its rental income calculation to 125% of 5.79%, began carrying out a full affordability assessment of landlords’ affordability from 27 July.
Montlake said: “With Barclays’ recent changes around buy-to-let affordability it will be interesting to see if other lenders follow suit to either ease back on the amount of buy to let business they have or potentially try to pre-empt potential moves from regulators to try to stifle the buy to let market.”
According to Barclays’ website, completion of the affordability assessment could work in favour of applicants. Where the rental cover calculation is not met and it has been established that from the affordability that applicants have a sufficient level of disposable income – applicants will be allowed to use this to bolster the rent.
