Landbay relaxes portfolio stress tests

Landbay has made changes to its underlying portfolio stress test for portfolio landlords.

It will now require rents to cover 125 per cent of the mortgage at an interest rate of 5 per cent, rather than the standard 125 per cent at 5.5 per cent.

Landbay added that if an application fails this test, it may consider applications using 10 per cent of the declared income, provided the applicant had a minimal personal income of £100,000.

The specialist lender says these would be determined on a case-by-case basis.

It said these changes were part of its “ongoing commitment” to being fully equipped for the recent PRA changes.

These new rules – which came into effect in September 2017 – required lenders to apply additional affordability tests on landlords with portfolios of four or more mortgaged properties.

This led to more stringent lending criteria initially, although this move by Landbay may indicate some correction to this trend.

This is the latest in a series of updates to Landbay’s credit policy. Last week the lender announced it would offer buy-to-let mortgage deals to first-time landlords who do not own a residential property. However again there is a high minimum personal income (£85,000) required to access these loans.

Landbay’s managing director of intermediaries, Paul Brett says: “The buy-to-let market is set to become more complex in 2018, and as landlords move to navigate the changing environment, so too must lenders ensure that their approach to lending is robust.

“This is why we have chosen to refine our underlying portfolio stress tests, demonstrating our ongoing commitment to portfolio landlords.”

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