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Most BTL lenders expected to adopt 140% rental covers this year

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Most lenders in the buy-to-let market will have moved rental covers from 125 to at least 140 per cent by the end of the year, according to Mortgages for Business managing director David Whittaker.

Speaking at the FSE exhibition in London today, Whittaker said that brokers have a “fundamental” role in ensuring their clients are well informed on the changes taking place, including the increases in stress test requirements that are becoming increasingly commonplace among buy-to-let lenders.

The event was held in Old Billingsgate and attended by more than 1,200 delegates. Whittaker said stress tests are “getting testing” for brokers as the requirement for 145 per cent rental covers creeps into the market.

He predicted a change to stress test requirements by the end of the year for those who haven’t already upped affordability demands and that, combined with the stamp duty surcharge and a reduction to tax relief available to landlords, buy-to-let has “become very taxing.”

Whittaker also forecast that new underwriting standards would be introduced for the buy-to-let sector before the end of the year, particularly for professional landlords.

Separately, speaking as part of an industry panel debate, One Savings Bank sales director Adrian Moloney anticipated a move towards a “more professional” buy-to-let sector and away from the “dinner party” landlord.

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