NatWest Intermediary Solutions will implement the new Prudential Regulation Authority (PRA) requirements for portfolio buy-to-let business from tomorrow, Friday 29 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%.
The lender also confirmed plans to enhance its buy-to-let proposition in Q4 by increasing the maximum number of rented properties a customer can own from four to 10. In other changes later in the year, maximum aggregate customer borrowing will be increased from £2m to £3.5m.
Again later, the current £50,000 minimum income for aggregated borrowing over £1m will also be removed and all customers will be required to meet the standard buy-to-let minimum income of £25,000.
However, from tomorrow, NatWest is offering an improved buy-to-let calculator hosted on NatWest’s intermediary website which will make it easier for brokers to assess customers’ affordability, it said.
Alongside its revised ICR, the lender will continue to top-slice in its assessment if there is a rental shortfall and consider any free personal income. But, in all cases, expected rent must continue to meet a minimum rental cover calculation of 5.5% x 125%.
The provider has also redefined the maximum number of properties an applicant can own from ‘mortgaged’ to ‘rented’ and the maximum number remains at four.
The lender will also be using a new valuation service to assess rental demand and income for all other properties being let, with the results used to validate customer affordability.
NatWest will be asking brokers to provide a raft of additional information on customers’ existing mortgaged properties, both residential and BTL, to enable a full affordability assessment. For portfolio cases, extra information will be required on landlord experience, lettings agent relationships and any plans to reduce or enlarge the portfolio.
Graham Felstead, head of intermediary mortgages, NatWest Intermediary Solutions, (pictured) 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.”