The changes comply with the Prudential Regulatory Authority’s rules which demand income and affordability checks be done on each landlord with four or more mortgaged properties from 30 September.
The lender began a series of 70 workshops two weeks ago to educate advisers on the upcoming changes and has already seen 1,000 brokers and hopes to see another 4,000 to 5,000 in the coming weeks.
Personal income priority
Phil Rickards, head of BM Solutions said brokers have never had to take the personal income element of any buy-to-let application very seriously but the tax changes have changed this now.
“BM Solutions is taking a tiered approach to the buy-to-let application, which is assessed accordingly, so this is a step change for the market and there will be a lot of different approaches from lenders market-wide.”
He added the focus of BM Solutions’ workshops was keying customer’s details correctly and the different documentary evidence brokers will need to provide, including the differences for self-employed and employed borrowers.
Market slowdown
Rickards said he expected the buy-to-let lending market to slow in the short-term as both lenders and brokers bed-in the changes.
“You’ll see a dip in the short-term but our business has held up year-on-year,” he added.
“My one frustration is that there is a lot of negativity about buy-to-let business, but it’s an opportunity to do some great quality business with remortgaging buoyant and product transfers representing another opportunity.”
In August, BM Solutions confirmed it will accept applications from landlords with a maximum of 10 mortgaged buy-to-let properties including any new application to the lender itself, with no more than three properties allowed to be with Lloyds Banking Group.
The lender now requires applicants to have a minimum aggregate portfolio Rental Cover Ratio (RCR) of 145%, stressed at 5.5%. A minimum of £30,000 earned taxable income per application is needed with a maximum aggregate portfolio loan-to-value (LTV) of 75%.
