Natwest has announced an overhaul of its underwriting processes for portfolio landlords ahead of September’s regulatory changes for complex buy-to-let, but insists that the reforms will ‘continue to support’ investsors.
From 11 September, the lender will require additional information on landlords’ other residential and buy-to-let properties to enable it to undertake a full affordability assessment, with the same stress rate applied to all other mortgages in addition to the existing application.
The rules, which are being introduced ahead of the Prudential Regulation Authority’s deadline for tougher underwriting standards on 30 September, will see brokers offered access to an improved buy-to-let calculator hosted on NatWest’s intermediary website, designed to make is simpler for them to assess customers’ affordability.
A new valuation service will also be introduced to assess rental demand and rental income for all other properties being let, with the results used to validate customer affordability.
The lender’s interest coverage ratio will be reduced from 5.5% times 145% to 5.5% times 135%, and NatWest will continue to top-slice if there is a rental shortfall, taking into account any free personal income the applicant may have.
All customers will be required to meet the NatWest’s standard buy-to-let minimum income of £25,000, while the maximum aggregate customer borrowing permitted will be raised from £2m to £3.5m.
Graham Felstead, head of intermediary mortgages at NatWest Intermediary Solutions, said: “The buy-to-let market continues to be important for customers and brokers and it’s one that we will continue to support.
“The new PRA requirements have given us the opportunity to review our whole approach to the buy-to-let sector and I am delighted that we will continue to lend to both non-portfolio and portfolio landlords with an enhanced proposition for intermediaries and their customers.
“With any change comes an element of uncertainty, but by making our intentions clear now and developing our calculator we hope that brokers and their customers can be reassured that they will be able to count on NatWest as one of their key lenders in this market.
“We will communicate clearly with intermediaries over the coming weeks about what changes they need to make and what we will be doing differently so that we can have a smooth transition come 11 September when these changes are implemented.”