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NatWest will implement PRA changes for Buy to Let from 11 September

09 August 2017

Natwest

NatWest Intermediary Solutions has confirmed that it will continue to support portfolio landlords following the changes in regulation that are being introduced in September. 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 in the light of these changes. 

NatWest will also introduce several other enhancements to its buy-to-let proposition later in the year. 

Here’s a summary of the changes being introduced from 11 September:

  • New and improved buy-to-let calculator hosted on NatWest’s intermediary website (intermediary.natwest.com) which will make it easier for brokers to assess customers’ affordability.
  • To ensure customers can afford all existing mortgage commitments the lender will require additional information on their other properties (residential and buy-to-let) to enable a full affordability assessment. The same stress rate will be applied to all other mortgages as well as the current application. 
  • A new valuation service will be introduced to assess rental demand and rental income for all other properties being let, with the results used to validate customer affordability.
  • For portfolio landlord applications, additional information will be asked for in relation to landlords’ experience, use of letting agents and future plans to expand or reduce their portfolio. 

Here is a summary of the changes being made in Q4:

  • Increase the total number of buy-to-let properties it will allow a landlord customer to own from 4 to 10. The total will include unencumbered properties and properties mortgaged with another lender.
  • Introduce a revised Interest Coverage Ratio (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 to £3.5m, up from £2m.
  • 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, 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.” 

We have updated this information and all other recent activity from lenders around the PRA changes on our Matrix which can be viewed here.


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