Accord has altered its buy to let rental calculation requirements in a bid to encourage buy to let investment by easing the burden on landlords.
The lender will now consider whether a property is a freehold or leasehold as well as differentiating between whether a landlord is hoping to remortgage their existing property where no capital raising is required.
Prior to the revamp, all buy to let borrowing from Accord was subject to a 135 per cent ICR and a stress rate of 5.5 per cent for terms of less than five years and 5 per cent for all five-year products.
Following the changes, landlords taking out a five-year fix will continue to enjoy an interest coverage ratio (ICR) of 135 per cent at a stressed rate of either 5 per cent or the product rate, depending on which is higher. This will be irrespective of property tenure or whether it is a purchase or remortgage.
Landlords looking to re-finance an existing BTL property without raising additional capital will also benefit from a cover ratio of 135 per cent regardless of the product term. This will come with a stressed rate of 5 per cent for a 5-year fix and either 5.5 per cent, or 2 per cent above pay rate, for shorter-term products.
All landlords looking to purchase or remortgage with additional capital raising on a leasehold property will require a cover ratio of 145 per cent. This will need to be at either 5 per cent for a 5-year fix or 5.5 per cent for shorter term products. This is calculated to reflect the additional management costs they incur.
Accord Buy to Let’s commercial manager, Chris Maggs, said: ‘We’ve reassessed our rental calculations to fairly reflect the level of costs incurred across the range of landlords’ properties, which also take into consideration the changes in the buy-to-let market. Landlords are currently reviewing their portfolios to ensure they’re working in the best way for them. We’re committed to supporting landlords to maintain a sustainable rental portfolio and we hope these adjustments will make a difference – whilst keeping things simple for brokers.’