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BM Solutions outlines tailored affordability assessment for buy-to-let landlords

  • 07/11/2016
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BM Solutions outlines tailored affordability assessment for buy-to-let landlords
BM Solutions has unveiled changes to its affordability approach for landlords in reaction to incoming tax reform for the buy-to-let market, while making several changes to its lending policy.

In response to the Prudential Regulation Authority’s intentions to tighten underwriting standards alongside the looming restriction to mortgage interest relief for landlords, BM Solutions has confirmed it will retain the minimum rental coverage ratio of 125% for basic rate tax payers, while adopting a tailored approach for higher and top rate customers.

The lender said its calculations will be “relative to the customer’s individual circumstances”, but would not reveal the maximum rental coverage calculation that landlords could be subject to.

BM Solutions has also upped the maximum age limit for buy-to-let customers from 75 to 80, in recognition that many buy-to-let landlords are looking to property as a source of income in later life.

In addition, its maximum five-bedroom policy will be removed, with the requirement that the valuer is satisfied if a property has more than five lettable rooms.

Phil Rickards (pictured), head of BM Solutions, said brokers would be provided with access to two new affordability calculators to find out up front what rental coverage ratio would be required of their client.

“I’m excited that after investing considerable time and resource in a tailor-made solution rather than a one size fits all approach, we continue to support sustainable buy-to-let lending for borrowers. I’m confident that our approach will continue to help brokers write good quality business,” he said.

Rickards confirmed the lender will be adopting requirements set out by the PRA to implement a minimum stress rate of 5.5% on buy-to-let lending by the end of the year.

BM Solutions is currently working on a face-to-face educational programme with brokers about the changes, which is expected to reach around 2,500 intermediaries nationwide.

BM intends to implement its revised policy before the end of the year.

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