Mansfield Building Society has unveiled some of the changes it is making to its underwriting criteria for portfolio landlords ahead of the Prudential Regulation Authority (PRA) changes which come in to force at the end of the month.
It has also hinted that further tweaks will allow higher rate taxpayers to potentially offset disposable income against shortfalls on its new interest coverage ratio (ICR).
The mutual confirmed that landlords with four or more mortgaged properties would be required to provide an assets and liabilities statement, together with a detailed schedule of all properties and loans outstanding when applying for future mortgages.
A simplified buy-to-let stressed interest rate will be applied at 5.5% (or 2% above pay rate, whichever is the higher), irrespective of application type or an applicant’s tax status.
For basic rate taxpayers, the business buy-to-let ICR will now be calculated at 125%, while for higher/additional rate tax payers, any portfolio purchases or remortgage applications with additional borrowing will continue to be calculated using an ICR of 145% of the monthly mortgage interest payment at the stressed rate.
Consumer buy-to-let, regulated (family) buy-to-let, and pound-for-pound remortgages, will all be calculated using an ICR of 125% of the monthly mortgage interest payment, even if the applicant is a higher rate tax payer.
Mansfield BS mortgage executive David Newby (pictured), said the latest changes showed its individual underwriting approach could readily adapt to the regulatory changes.
“As the buy-to-let sector continues to see further regulatory change, you can be confident that The Mansfield’s proactive approach is sufficiently agile to adopt the necessary change while at the same time seeking ways to innovate,” he said.
“We’ll be bringing you more news about ways in which higher earners can use personal disposable income to offset potential ICR shortfalls in due course.
“We believe the above changes, and the further enhancements we’re about to announce, reaffirm our support for the buy-to-let market and we’re looking forward to sharing more news with you very soon,” he added.
Owain Thomas is Features and Contributing Editor at Mortgage Solutions. He has previously covered the protection and mortgage industry, more recently he edited Workplace Savings and Benefits, and HRD Connect.
Owain won the Financial Healthcare Journalist of the Year (B2B) at the Headline Money Awards in 2014 and 2016. He also won the Protection Review’s Journalist of the Year award in 2012.