YBS Commercial changes affordability to assist landlords

  • 29/02/2024
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YBS Commercial changes affordability to assist landlords
YBS Commercial Mortgages has updated its buy-to-let (BTL) affordability calculations for commercial BTL products.

The stress rate has been reduced from 125 per cent interest coverage ratio (ICR) at pay rate plus 0.3 per cent to stressing at 125 per cent ICR at pay rate.

The lender said that the move “recognises the reality faced by UK landlords who face a challenging interest rate environment, as well as ongoing economic headwinds”.

YBS Commercial said the changes aimed to support landlords in areas where rents are lower relative to property value and account costs faced by landlords.

The change will up what they can borrow, subject to remaining within the lender’s 75 loan to value (LTV) criteria.

It will allow landlords to borrow more on such properties, and free up more capital to invest or do property maintenance.

As an example, for each £1m of assets, based on a yield of four per cent and a rental income of £40,000 per year and assuming a five-year fix at 5.60 per cent, landlords will be able to borrow around five-and-a-half per cent or £30,000 more.

Tom Simpson, managing director of YBS Commercial Mortgages, said: “We understand the role that landlords play in providing much-needed, quality rented accommodation, which in the current climate is in short supply.

“We hope that reducing our stress rate – which is another example of how we continue to respond to broker feedback – will provide the support that their landlord clients need, improving their ability to borrow more in the current, more challenging interest rate environment.

“As a responsible lender focused on the importance of high-quality accommodation, these changes will also benefit tenants, as more landlords have access to our product suite.”

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