Leeds Building Society ready for buy to let lending rule change
Leeds Building Society has confirmed its readiness for changes to buy to let lending rules in the UK coming into force next month.
In line with new Prudential Regulation Authority (PRA) rules, Leeds Building Society will define a portfolio landlord as a borrower who has four or more mortgaged rental properties.
‘We’re committed to supporting landlords and the buy to let market so will continue to accept mortgage applications from portfolio landlords after 30 September,’ said Jaedon Green, Leeds Building Society’s director of product and distribution.
He explained that the lender has 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,’ he pointed out.
‘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,’ he added.
The Society made changes to its buy to let criteria in January, including increasing ICR for buy to let and holiday let mortgages from 1.25% to 140%, assessing ICR taking into account mortgage interest tax relief, a 5.5% affordability stress test rate for purchase and capital raising re-mortgages and a 5% affordability stress test rate where there is no additional borrowing.
An ICR assessment is not required for existing Society buy to let customers at the end of their existing deal, with no additional borrowing and it has removed the minimum income requirement which was previously £25,000 per annum or £40,000 for joint applicants.
The Society’s underwriting approach will continue to be proportionate to the complexity of each case and in addition to the property schedule already requested for buy to let applications, on or after 29 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.
‘The buy to l 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,’ Green said.