14 September 2017
The Mansfield Building Society has announced it is well placed to meet the Prudential Regulatory Authority’s deadline of the 30 September for underwriting Buy to Let Portfolio Landlords whilst also implementing further changes to simplify the Interest Coverage Ratio (ICR) it applies when assessing affordability.
In line with the new regulatory requirements, portfolio landlords (i.e. 4 or more mortgaged properties) will now be required to provide an assets and liabilities statement, together with a detailed schedule of all properties and loans outstanding.
A simplified BTL stressed interest rate will be applied at 5.5% (or 2% above pay rate, whichever is the higher), irrespective of application type or an applicant’s tax status.
The Interest Coverage Ratio (ICR) will now be calculated at 125% for Business BTL where the applicant is a basic rate tax payer.
In addition, Consumer BTL, Regulated (Family) BTL, and £-for-£ BTL remortgages, will all be calculated using an ICR of 125% of the monthly mortgage interest payment even if the applicant is a higher rate tax payer.
For higher/additional rate tax payers, any Business BTL purchases, or Business BTL remortgage applications with additional borrowing, will continue to be calculated using an ICR of 145% of the monthly mortgage interest payment at the stressed rate.
Mortgage Executive, David Newby, said the latest changes from The Mansfield showed that its individual underwriting approach could readily adapt to the regulatory changes whilst maintaining the common-sense underwriting it prides itself on:
“As the buy to let sector continues to see further regulatory change, you can be confident that The Mansfield’s proactive approach is sufficiently agile to adopt the necessary change whilst at the same time seeking ways to innovate – we’ll be bringing you more news about ways in which higher earners can use personal disposable income to offset potential ICR shortfalls in due course.
In the meantime, the approach that we’ve taken will fairly consider the individual circumstances of landlords regardless of whether they’re professionals, consumers or simply letting out a property to a close relative.
The latest criteria changes are being delivered with a high level of support to our intermediary partners. This includes the benefit of speaking with our dedicated intermediary support team and also continued access to our experienced underwriting team who adopt an ‘each case on its own merits’ approach to the assessment of all applications.
We believe the above changes, and the further enhancements we’re about to announce, reaffirm our support for the Buy to Let market and we’re looking forward to sharing more news with you very soon.”
Danny Belton, Head of Lender Relationships at Legal and General Mortgage Club, commented, “Smaller Regional Building Societies, such as The Mansfield have built their reputation on their ability to manually underwrite cases. The changes required for BTL Portfolio lending will require a more manual approach, and it’s good to see The Mansfield react with these changes”.