From 21 February, the buy-to-let affordability rate for loans with an LTV of 60% or over will increase from 5% to 5.5%. This means the rental calculation for these deals will stand at 125% of 5.5%.
For loans under 60% LTV, Santander will continue to use the existing rate of 5% to determine buy-to-let affordability.
It said the change was in line with current market conditions and reflected its ‘continued prudent approach to lending and affordability’.
A broker note issued by the lender, said: “The BTL [buy-to-let] market is undergoing significant change with the additional 3% stamp duty on second home purchases from 1 April, and the phased reduction in tax relief starting next year adding to the cost of being a landlord.
“As a result landlords will be reviewing their business models and lenders will also be reviewing their rental cover calculations to ensure affordability assessments keep pace with the change.”
Both TSB and Barclays have made changes to buy-to-let affordability criteria in response to the 3% Stamp Duty premium for second purchases from 1 April 2016.
Just today, newly-launched lender New Street Mortgages announced it would offer preferential rental calculations for landlords operating in London and the South East.
Santander added that buy to let continued to be a key priority for the brand as it looked to grow business in the sector.
“Our competitive BTL rates combined with our quick time to offer mean that we are well placed to help customers keen to invest in property.”
