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Barclays responds to buy-to-let tax relief cuts by upping rental calculation

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  • 30/11/2015
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Barclays responds to buy-to-let tax relief cuts by upping rental calculation
Barclays will increase its rental cover ratio from 125% to 135% for a new applications from 7 December in response to the cuts in tax relief for landlords announced by George Osborne in the Summer Budget.

From April 2017, the government will begin to phase out the higher rate tax relief gradually over a period of four years. Those who have a buy-to-let property will no longer be able to claim 45% tax relief on their monthly payments, instead they will only be able to claim the basic rate of 20%.

The lender said the changes in the tax regime would create the risk of increased costs for new and existing landlords which meant it needed to amend its affordability calculator to reflect these pressures.

There will be no other changes to the affordability calculation; the affordability rate remains at 5.79%.

In a statement Barclays said: “The increase in the rental cover ratio will ensure we protect our new customers as they look to invest in buy to let in the long term.”

Existing Barclays buy-to-let customers looking to switch rates will not be affected by the changes.

Earlier in the year Barclays changed its affordability criteria to allow applicants to use personal disposable income to make up any shortfall in its rental cover calculation

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