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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ChristinaReedUK
ChristinaReedUK 20 Jun 2016

I don't understand why it's always a war between the two sides. Either, way the landlord is probably keeping a detailed inventory and will see the changes you've made. I just don't understand why there...

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NathanGreen
NathanGreen 16 Jun 2016

Seeing that the tenants are quite satisfied with their landlords and the properties is indeed great. I wonder, though, what is the situation in London alone? The tenants face sky-high rent levels in the...

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AndiMur
AndiMur 15 Jun 2016

TheGuardian published the same forecast. But on the other hand, professional brokers express different opinions. According totranio.com, an exit from the EU would not affect the demand/supply imbalance...

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Gary Holmes
Gary Holmes 14 Jun 2016

Having a professionally completed inventory at check-in and check-out is clearly (to me at least) of minor value. Tenants make un-authorised modifications and/or walk off with items that belong to the

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Violet Gibson
Violet Gibson 14 Jun 2016

Cautious people think buying off-plan is reckless, but over the past few years investors have literally made fortunes.Pre-release prices have obvious benefits for the developer, who gets instant finance...

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Kate Windleton
Kate Windleton 14 Jun 2016

An interesting research indeed. I guess that is in complete contrast with the United States where people often move from one coast to another. It will be interesting to hear the trends for people moving...

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NathanGreen
NathanGreen 14 Jun 2016

I think it all depends on the market conditions and how well your company is doing. You will agree that you can't demand more when you're killing yourself just to hang in there. Sometimes you need all

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ChristinaReedUK
ChristinaReedUK 13 Jun 2016

What does "detecting a bad vibe" mean actually. I've had certain vibes like these and yet have always found a reason , if there's any, why I don't like a certain property. The property maintenance might...

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keybanks estates
keybanks estates 08 Jun 2016

Great News for first time buyers, about time two!

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NathanGreen
NathanGreen 07 Jun 2016

I agree with #6 - you should maintain your garden according to the target buyer. One thing is universal, though - cleanliness and order. Having the yard clutter-free and clean will help people who do enjoy...

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NathanGreen
NathanGreen 06 Jun 2016

I will always say that London is overrated. Sure it is the capital, but it's too stuffed in there. It's more of a business city to me.

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Paul
Paul 25 May 2016

Estate agents are pathetic when it comes to fees. They have this 'I had to do it at 1% because that's what the others were quoting' mentality. We are the most expensive agents in our area, charging double...

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