Buy to Let

Natwest announce new ICR for BTL business

Natwest announce new ICR for BTL business





NatWest Intermediary Solutions will implement the new PRA requirements for buy-to-let business from Friday 29th September. At the same time, it will introduce its revised Interest Coverage Ratio (ICR) calculation of 5.5% x 135%, reduced from 5.5% x 145%.

It has also revealed plans to further enhance its buy-to-let proposition in Q4 that includes increasing the maximum number of rented properties a customer can own from 4 to 10.

Some of the changes being introduced from 29 September include new, improved buy-to-let calculators hosted on NatWest’s intermediary website which will make it easier for brokers to assess customers’ affordability. Revised Interest Coverage Ratio (ICR) calculation of 5.5% x 135%, reduced from 5.5% x 145%. The lender will continue to top-slice if there is a rental shortfall, taking into account any free personal income the applicant may have. In all cases expected rent must continue to meet a minimum rental cover calculation of 5.5% x 125%.

Redefining the maximum number of properties an applicant can own from ‘mortgaged’ to ‘rented’; the maximum number remains at 4 and new valuation service to assess rental demand and rental income for all other properties being let, with the results used to validate customer affordability will also be included in the changes.

The changes being made in Q4 are:

Increasing the maximum number of rented properties a landlord customer can own from 4 to 10. The total will include unencumbered properties and properties mortgaged with another lender.

The maximum aggregate customer borrowing allowed will be increased from £2m to £3.5m.

The current £50,000 minimum income for aggregated borrowing over £1m will be removed. All customers will be required to meet the standard buy-to-let minimum income of £25,000.

Graham Felstead, Head of Intermediary Mortgages, NatWest Intermediary Solutions, said, “I am pleased to confirm that we are ready to implement the new PRA requirements. The great progress we have made with our systems has enabled us to introduce the revised ICR ahead of our original schedule. Our commitment to continue supporting portfolio landlords is evidenced by the further changes we are introducing later this year.”

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