Kent Reliance has launched new affordability measures for buy-to-let which take a broader view of income, including landlords’ earnings from sources other than the property.
The lender, which is part of OneSavings Bank, will use earned income to supplement the interest coverage ratio (ICR) for buy-to-let loans, where the rental property yield in itself does not meet minimum requirements.
The changes are aimed at supporting non-portfolio landlords, whether they are borrowing through a limited company or as an individual.
High earners are likely to benefit, particularly where they have low-yielding property.
OneSavings Bank sales director Adrian Moloney says: “This new, broader approach to affordability will provide additional flexibility to allow earned income to form part of the affordability assessment for a buy-to-let application.
“High property values, particularly within London and the South East, can result in lower yields and as a result, some applicants may be refused lending, even on good quality properties.
“We’re looking to fix that.”
He adds: “To support this product, we’ve also updated our buy-to-let calculator so brokers can immediately see if a case fits the income backed criteria prior to submission, thereby simplifying the process and enabling a faster turnaround.”
Buy to Let Club managing director Ying Tan says: “The lending landscape has changed considerably as a result of the new rules on affordability and landlords in areas with high property prices especially are feeling the impact.
“By taking into account an investor’s other incomes to support their application, Kent Reliance is helping landlords to navigate the market challenges and I’m sure this move will be widely welcomed.”
Coreco director Andrew Montlake says: “There are a whole host of buy-to-let landlords who invest in property for long-term growth who have spare income to make up for lower rental yields, and more choice of lenders who top-slice is needed in the market.”