In all existing cases rent must continue to meet a minimum rental cover calculation of 5.5% x 125%.
NatWest is reducing its buy-to-let income coverage ratio requirement to 135% at 5.5% from tomorrow – down from 145% at 5.5%.
At the same time it will bring in tougher portfolio buy-to-let requirements to satisfy the Prudential Regulation Authority rules coming into force at the end of the month.
At NatWest this will apply to landlords with four rented properties, even if they are not all mortgaged.
Currently the maximum number of rented properties a landlord can own with NatWest is four, meaning few applicants will be affected, seeing as portfolio changes affect those with at least four properties.
In the fourth quarter NatWest plans to up the number of rented properties a landlord customer can own from four to 10, including unencumbered properties and properties mortgaged with another lender.
Graham Felstead, head of intermediary mortgages, NatWest Intermediary Solutions, said: “The great progress we have made with our systems has enabled us to introduce the revised ICR ahead of our original schedule.”
Due to the PRA underwriting rules brokers will have to supply information about landlords’ experience, use of letting agents and future plans to expand or reduce their portfolio.
In Q4 NatWest will also up the maximum aggregated customer borrowing allowed from £2m to £3.5m.
The current £50,000 minimum income for aggregated borrowing over £1m will be removed.
And all customers will be required to meet the standard buy-to-let minimum income of £25,000.
Felstead added: “I am pleased to confirm that we are ready to implement the new PRA requirements.
“Our commitment to continue supporting portfolio landlords is evidenced by the further changes we are introducing later this year.”
