The timing isn’t great. The new year generally gives us the chance to start afresh and landlords would no doubt like to do just that and put the challenges of the last couple of years behind us. Starting 2017 with a new challenge is not quite what any of us had in mind.
Anyway, back to 2016. Lenders are clearly planning ahead for a tricky year as the changes to rental calculations and criteria continue.
Perhaps somewhat late to the party, Santander became the latest lender to adjust its rental calculations. The Spanish giant’s buy-to-let rental cover will now be set at 145% while tiered buy-to-let affordability rates based on LTV will be removed and a single affordability rate of 5.50% up to and including 75% LTV will be applied.
However, BM Solutions revealed its 125% rental cover ratio would remain unchanged for basic rate tax payers while for higher rate and additional rate clients the rental requirement would be tailored to the individual situation. This is a very interesting approach and one that many other lenders may wish they had used.
After cutting rates on many of its buy-to-let products in August, Skipton Building Society this month announced it was increasing rates by up to 23 bps on the majority of its two- and five-year buy-to-let fixed rate products between 60 and 75% LTV. An odd move when the aim is surely to entice buy-to-let borrowers amid difficult times. However, the cuts the society implemented in August were quite large (up to 50bps), so this really just levels things out.
Elsewhere, rate reductions continued with a number of lenders cutting rates on their buy-to-let ranges.
BM Solutions announced cuts of 0.10% to its three and five-year fixes. Keystone reduced rates across its entire Solutions range as well as increasing its maximum loan size from £500,000 to £1m. Meanwhile, Kensington lowered rates by an average of 50 basis points across its existing buy-to-let range. Two-year fixed rates are now available from 2.79% at 70% LTV, while 75% and 80% LTV products are available from 2.99%.
New Street Mortgages announced it was adding 65% LTV products to its range and Fleet Mortgages made changes to its criteria for HMOs. Required landlord experience has been reduced to two years if the primary applicant has owned a HMO property for that period (or three years’ standard buy-to-let experience).
