Lending will not be affected by rental calculation increases

Lending will not be affected by rental calculation increases

New research from Buy to Let Club has shown an increase in rent cover can be absorbed.

125% @ 5% has been the norm for many years however there is a clear shift in direction for many lenders.  TSB and Paragon are the latest lenders to join Buy to Let powerhouses TMW, BM Solutions and Godiva to calculate rent cover at 125% @ 5.5% for 65% LTVs and over.   Given the focus on stress testing, and some of the tax changes to be implemented by the government over the next few years there is logic behind these decisions.


Buy to Let Club has conducted some in depth analysis on applications from the last quarter of 2015 (Oct –Dec ) and have identified that the average rent cover based on the rentals provided for applications is 163% @ 5.5%.  Therefore even at 125% @ 5.5% there is sufficient breathing space, and should not impact the borrowing levels of the majority of cases.

Ying Tan, managing director of Buy to Let Club, says: “This analysis shows, that LTVs are sensible and rents are high enough to sustain the extra rent stress testing lenders are implementing.  The analysis is nationwide, however the rent coverage is tighter in the south.  The only mainstream lender that still operates at 125% @ 5% is Santander.   With their slick processing they are gaining business, particularly in London and the South East where yields are lower.  We currently have a market leading two year fix exclusive with a flat fee which has been attracting a lot of broker interest in these areas.”

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Latest Comments

Spencer Fortag
Spencer Fortag 25 Aug 2016

The funny thing is, I mentioned the brick issue in my blog back in April: http://medwayproperty.blogspot.co.uk/2016/04/the-medway-property-market-and-lack-of.html

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SecomTech
SecomTech 19 Aug 2016

Firstly, I either lodge with DPS or do not take a deposit...secondly, If a tenant has not received a confirmation their deposit is secured with either a scheme or in an insured account with an agent/landlord,...

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jasonevans
jasonevans 19 Aug 2016

Belvoir has over 15 years of experience in property lettings, buying and renting and is one of the best agencies I know about. I have heard that they revived an award for the hard work. Really amazing...

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jasonevans
jasonevans 19 Aug 2016

Usually these areas are least affected when it comes to unexpected economical collapse.

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TheWaspNestRemover
TheWaspNestRemover 11 Aug 2016

You agree to pay for the treatment needed to get rid of fleas, ants, mice, wasps nests and other pests unless you can prove that these are a result of us not meeting our repairing responsibilities or these...

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madisonwelch80
madisonwelch80 02 Aug 2016

16% is quite a raise. Let's hope this tendency won't continue for long.

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madisonwelch80
madisonwelch80 02 Aug 2016

?66,963 is a serious price drop However buying a property it a serious investment only small percentage of the UK population could afford.

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madisonwelch80
madisonwelch80 02 Aug 2016

Wow, it kind of surprised me. I mean counting on mom and dad's bank even after retirement is too much. That's the moment in life when one should have ensured themselves. I am shocked.

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AbbieP.
AbbieP. 22 Jul 2016

"While house prices in the most expensive eleven boroughs have declined values in the cheapest eleven boroughs continue to rise" - not a nice way to even out the price range. London is overrated as it

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AbbieP.
AbbieP. 21 Jul 2016

And try to profit from your decisions, I may add

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CommercialTrust
CommercialTrust 19 Jul 2016

Retirement investment has always been one of the biggest draws of buy to let. And the buy-to-let demographic is, on balance, older. (Over a third of our applicants are over 50 at the time of application.) It...

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Forrest Wheatey
Forrest Wheatey 11 Jul 2016

I find the time perfect for ever home-owner wannabe. Prices should slowly, but steadily drop, at least for the inner buyer. Making it harder for outsiders to buy properties (the whole Brexit thing means...

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