The ICR threshold has been lowered to support affordability and borrowing potential for investors in HMOs, multi-unit freehold blocks (MUFBs) and residential investment properties.
For HMO borrowing, individuals who are higher- or additional-rate taxpayers will be subject to an ICR of 145%, down from 160%. For companies or individual basic-rate taxpayers, the ICR has been reduced from 140% to 130%. Top slicing has been removed for both categories of HMO borrowers.
Where borrowing is for residential investments or multi-unit blocks (MUBs), the ICR for higher- and additional-rate taxpayers has been lowered from 145% to 140%. There is no change for companies or individuals paying the basic rate of tax, who will continue to be assessed on an ICR of 125%. Top slicing for both borrower categories has also been removed.
Expanded lending terms
The bank has also expanded its lending terms up to £2m at 65% loan to value (LTV) and £1.5m at 75% LTV for HMOs and MUBs.
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Free valuations on single HMOs up to six beds are now available and a tailored case management service to guide applications from start to finish has been introduced, along with flexible conveyancing and assisted legal fees on remortgages.
Jon Cooper (pictured), director of mortgages at Aldermore, said: “We believe that this enhanced buy-to-let proposition supports an increasing number of landlords who are moving into the HMO market.
“These changes again demonstrate our ongoing commitment to accessible solutions, clear communication, and expert guidance at every stage of the application process.”
Aldermore’s criteria updates follow a flurry of improvements made by lenders for HMO investors.
Higher yields and high demand from tenants for more affordable rented accommodation have made HMOs an attractive buy-to-let (BTL) investment for landlords – a dynamic lenders are keen to cash in on.
Earlier this month, YBS Commercial Mortgages expanded its product range for HMOs as Pepper Money launched a new HMO deal.
