Tax relief cut prompts Newcastle to tighten B2L criteria

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Newcastle Building Society has tightened its buy-to-let criteria in reaction to the Government’s tax relief changes.

The lender increased its rental coverage ratio to 145 per cent today, up from 125 per cent.

It has also increased its stress rate from 5 per cent to 5.5 per cent.

It will now lend on a maximum of three properties in a single portfolio, down from five previously.

The Government will gradually reduce the tax relief landlords can claim on their interest payments to 20 per cent from April 2017.

Head of distribution Steve Carruthers says: “As a responsible lender we are keen to ensure that customers are well positioned to deal with these changes in advance.”

Brokers have until 31 May to submit any applications agreed under the old policy.

In recent weeks The Mortgage Works, Barclays, Keystone and Foundation Home Loans have all increased their rental coverage ratio for individual borrowers in reaction to the upcoming tax relief cuts.