In line with new PRA rules which come into force next month, Leeds Building Society has announced that it is prepared for the changes and has put plans into place. The lender confirmed that it will define a portfolio landlord as a borrower who has four or more mortgaged rental properties.
Jaedon Green, Leeds Building Society’s Director of Product and Distribution, said: “We’re committed to supporting landlords and the Buy to Let market so will continue to accept mortgage applications from portfolio landlords after 30th September.
We’ve also increased the maximum number of Holiday Lets by 33%, which provides intermediaries with greater flexibility to mix and match, using the Leeds Building Society for up to four properties, whether Buy to Let, Holiday Let or a mixture.
And by lifting the maximum portfolio size from eight to 10 mortgaged rental properties, we’re recognising the growth in portfolio Buy to Let as the market matures.
There will be no changes to our existing loan to value (LTV) limits, maximum loan size, Interest Coverage Ratio (ICR) or stress rates.
We’re working very hard to make our Buy to Let proposition simple and straightforward and ensure our service is as broker-friendly as possible.”
The Society made changes to its BTL criteria in January, including:
Increasing ICR for Buy to Let and Holiday Let mortgages from 125% to 140%
Assessing ICR taking into account mortgage interest tax relief
5.50% affordability stress test rate for purchase and capital raising re-mortgages
5.00% affordability stress test rate where there is no additional borrowing
An ICR assessment is not required for existing Society BTL customers at the end of their existing deal, with no additional borrowing
Removing the minimum income requirement (previously £25k pa or £40k for joint applicants)
Available up to 70% LTV
The Society’s underwriting approach will continue to be proportionate to the complexity of each case.
In addition to the property schedule already requested for BTL applications, on or after 29th September, portfolio landlords will need to provide details of their assets and liabilities, and declare future investment property intentions.
Further information, such as cash flow, will be requested only in more complex cases, which the Society expects will account for a very small proportion of applications.
Jaedon added: “The Buy to Let criteria changes we introduced at the start of this year, were well-received by the industry,”
To further develop our proposition we’re preparing our underwriting and broker-facing colleagues to ensure that at launch we‘re able to fully support our intermediary partners.”