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TMW restricts B2L criteria after Govt tax changes


The Mortgage Works is upping its buy-to-let rental calculations and cutting its maximum LTV in response to government tax relief changes.

The lender is increasing its rental cover requirements from 125 per cent to 145 per cent and cutting its maximum LTV from 80 per cent to 75 per cent.

The changes come in from 11 May.

A broker note says the changes will “help landlords safeguard positive cash flow, as future tax relief changes begin to phase in from next year (April 2017)”.

The lender says: “These changes have been implemented in response to the forthcoming changes to landlord tax relief, which will start to be phased in from April 2017.

“At present, mortgage interest is fully tax deductible, but from April 2020 tax relief on mortgage interest will be limited to 20 per cent. This means that higher tax rate payers will pay more tax as relief is reduced to the equivalent level of a basic rate tax payer.”

TMW managing director Paul Wootton says: “As a responsible lender, this change is a pro-active move that recognises the need to help safeguard rental cover for landlords over the coming years, and in advance of the forthcoming changes to mortgage interest tax relief.

“TMW, as part of Nationwide, already robustly assesses the affordability of its buy-to-let mortgages against stress rates that are considerably higher than the borrower’s existing rate.

“The increase in the rental cover requirement is designed to strengthen this cashflow position even further, and help them withstand the impact of increased costs from the new tax regime.”

The lender’s maximum lending cap will still be calculated using the higher of either the stress rate or product pay rate.



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  • Carl McGovern 5th May 2016 at 12:56 pm

    Perhaps a more sensible approach would be to apply this higher rate tax payers only, as basic rate tax payers won’t be affected. Given that higher rate tax payers may have residual Income, this could be taken into consideration too. The danger is as usual that an over reaction is about to start and that won’t be helpful.

  • Alex Ramsay 29th April 2016 at 10:09 am

    More great news for BTL