"The new PRA requirements have given us the opportunity to review our whole approach to the buy-to-let sector"
The lender will be introducing a number of changes to how it assesses portfolio landlords from 11 September and has developed its online buy-to-let calculator to make it easier for brokers to assess a customer’s affordability.
For portfolio landlord applications, the lender will require additional information on their other properties (residential and buy-to-let) to enable a full affordability assessment. Additional information will also be asked for in relation to landlords’ experience, use of letting agents and future plans to expand or reduce their portfolio.
The same stress rate will be applied to all other mortgages as well as the current application.
A new valuation service will also be introduced to assess rental demand and rental income for all other properties being let, with the results used to validate customer affordability.
NatWest is also making a number of changes to its buy-to-let proposition in Q4.
It is increasing the total number of buy-to-let properties it will allow a landlord customer to own from 4 to 10, including unencumbered properties and properties mortgaged with another lender.
It also plans to introduce a revised ICR calculation of 5.5% x 135%, reduced from 5.5% x 145%. The lender will continue to top-slice if there is a rental shortfall, taking into account any free personal income the applicant may have. In all cases expected rent must continue to meet a minimum rental cover calculation of 5.5% x 125%.
The maximum aggregate customer borrowing allowed will be increased from £2m to £3.5m and the current £50,000 minimum income for aggregated borrowing over £1m will be removed. All customers will be required to meet the lender’s standard buy-to-let minimum income of £25,000.
Graham Felstead, Head of Intermediary Mortgages at NatWest Intermediary Solutions, said: “The buy-to-let market continues to be important for customers and brokers and it’s one that we will continue to support. The new PRA requirements have given us the opportunity to review our whole approach to the buy-to-let sector and I am delighted that we will continue to lend to both non-portfolio and portfolio landlords with an enhanced proposition for intermediaries and their customers.
“With any change comes an element of uncertainty, but by making our intentions clear now and developing our calculator we hope that brokers and their customers can be reassured that they will be able to count on NatWest as one of their key lenders in this market. We will communicate clearly with intermediaries over the coming weeks about what changes they need to make and what we will be doing differently so that we can have a smooth transition come 11 September when these changes are implemented.”
