NatWest Intermediary backs portfolio landlords, eases stress tests

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NatWest Intermediary Solutions has confirmed that it will take portfolio landlord applications when the PRA brings in tougher underwriting rules from 30 September.

The lender says it will take the applications but has not revealed the exact approach it will use.

However, NatWest says that on 11 September it will make several changes to how it handles buy-to-let.

Buy-to-let shakeup

These will include an improved buy-to-let calculator on the firm’s intermediary website, to make it easier for brokers to judge customers’ affordability.

The lender will also start asking for more information on customers’ other properties, both residential and buy-to-let. This is for overall affordability reasons, according to a NatWest statement.

NatWest will also roll out a new valuation service to assess rental demand and rental income for all other properties being let. The lender will also use the results to judge customer affordability.

Portfolio landlords will need to give extra information on their experience, use of letting agents and future plans to grow or shrink their portfolio.

Further changes

At some point in Q4 NatWest will also make extra changes to how it underwrites buy-to-let.

These will include increasing the total number of buy-to-let properties landlords can own from four to 10.

The lender will also bring in a revised ICR calculation of 5.5 per cent x 135 per cent, reduced from 5.5 per cent x 145 per cent.

The lender will continue to top-slice if there is a rental shortfall, taking into account any free personal income.

In all cases expected rent must continue to meet a minimum rental cover calculation of 5.5 per cent x 125 per cent.

The maximum aggregate customer borrowing allowed will be increased to £3.5m, up from £2m.

The current £50,000 minimum income for aggregated borrowing over £1m will be removed.

All customers will be required to meet the lender’s standard buy-to-let minimum income of £25,000.

NatWest Intermediary Solutions head of intermediary mortgages Graham Felstead says: “The new PRA requirements have given us the opportunity to review our whole approach to the buy-to-let sector and I am delighted that we will continue to lend to both non-portfolio and portfolio landlords with an enhanced proposition for intermediaries and their customers.

“With any change comes an element of uncertainty, but by making our intentions clear now and developing our calculator we hope that brokers and their customers can be reassured that they will be able to count on NatWest as one of their key lenders in this market.

“We will communicate clearly with intermediaries over the coming weeks about what changes they need to make and what we will be doing differently so that we can have a smooth transition come 11 September when these changes are implemented.”