Lenders tighten BTL lending criteria

Coventry building society are now the most recent lender to tighten their BTL (buy-to-let) lending criteria ahead of a rules change being brought in by the PRA (Prudential Regulation Authority). 

From the 14th September, applicants who own four or more properties, or are in the process of buying a fourth will now only be offered a maximum of 65% loan to value ratio with a minimum income coverage ratio of 125% against the national stress test rate of 5.5% across their entire portfolio. 

Other requirements include a period of more than 2 years between the requested purchase and when they acquired their first BTL investment and not purchasing more than three BTL properties within the past 12 months. 

Borrowers must also demonstrate they are not over-exposed to risk with lenders now being required to consider a portfolio as a whole. This means that applicants will be required to:
– Give information on their property investment experience
– Provide all details on other mortgages
– Reveal assets, liabilities, including tax
– Provide details of all historical and future cash flow from the portfolio
– Provide information on all forms of income

Coventry Building Society is the most recent lender after Accord Buy To Let and Paragon. All lenders must have the new standards implemented by the 30th September.