Buy to Let

Natwest shakes up ICR calculation

Natwest Intermediary Solutions is changing its interest coverage ratio calculation.

On the same day it implements new PRA requirements for portfolio landlords, the lender is revising its ICR calculation.

Natwest is reducing its ICR from 5.5 per cent x 145 per cent. It will now be 5.5 per cent x 135 per cent. The bank says it will continue to top-slice if there is a rental shortfall.

The changes will come into effect on Friday 29 September.

The bank has also revealed plans to enhance its buy-to-let proposition. It will increase the maximum number of rented properties a customer can own from four to ten.

Meanwhile, the upper limit for borrowing will be increased from £2 million to £3.5 million. The current minimum income requirement of £50,000 for borrowing of more than £1 million will be removed. But all customers will need to meet the standard buy-to-let minimum income requirement of £25,000.

An improved buy-to-let calculator will help make it easier for brokers to assess customers’ affordability.

Under new PRA changes, portfolio landlord applications will need to include extra information regarding the use of letting agents and future plans to reduce or expand a portfolio.

NatWest head of intermediary mortgages Graham Felstead says: “I am pleased to confirm we are ready to implement new PRA requirements. The progress we have made with our systems has enabled us to introduce the revised ICR ahead of our original schedule.”

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