The rental calculation is used by NIS to assess affordability.
It will mean that buy-to-let mortgage applicants who can demonstrate the financial means to cover rental voids and buildings maintenance and have no more than three buy-to-let properties in total, may be able to take advantage of the reduced rental cover calculation of 100% at 7%.
Graham Felstead, head of intermediary channel, NIS, said: “Having reviewed the current market dynamics, we believe there is an opportunity to increase our buy-to-let lending in the small portfolio, higher income sector of the market.
“This is where landlords can demonstrate that they have the financial means to cover costs such as rental voids and buildings maintenance from their own resources.
“Recent statistics released by the Council of Mortgage Lenders showed that the buy-to-let market is improving, with the number of new loans rising by 16% in Q3; but it’s by no means a homogenous sector.
“The performance of geographical regions and portfolio types will differ, so it’s important not to get too carried away. From a lenders’ point of view, it’s important to balance the mix of business you attract.
“We have focused our buy-to-let lending on broker clients with smaller portfolios rather than the professional landlords’ sector, so this improved rental calculation should prove to be attractive to intermediaries who have clients operating in this sector of the market.”
