Barclays to increase stress testing after Summer budget tax relief cuts to Landlords

by Neil Patterson

10:11 AM, 1st December 2015
About 3 years ago

Barclays to increase stress testing after Summer budget tax relief cuts to Landlords

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Barclays to increase stress testing after Summer budget tax relief cuts to Landlords

Barclays, and its mortgage arm Woolwich, are one of the first high street lenders to take action after the announcement in the Summer Budget that there will be a gradual tapering down of tax relief for Buy to Let borrowers to the basic rate of tax from April 2017.Barclays

From the 7th of December all new Buy to Let loans will be stress tested with interest cover at 135% up from 125%, but the Notional rate will stay the same at 5.79%. This means that for every £1 of rent per month a property can achieve you can now borrow £153.52 down from £165.80.

In a statement to brokers Barclays said: “Given the changes to the Buy to Let tax regime announced in the Summer Budget, there will be the potential for increased future costs for both new and existing BTL landlords. Barclays continues to have a desire to support the BTL market by best serving the aspiring landlord segment who may be looking for a long term investment.

As a responsible lender, Barclays wants to ensure that our aspiring landlord customers can afford the increase in tax liability once these changes come into force.

Barclays has already changed the affordability criteria to enable applicants to use personal disposable income (including bonuses) to make up any shortfall in our rental cover calculation.”

With this first blink by a Major high street lender I would expect other banks to be carrying out similar reviews in the not too distant future.



Comments

Gary Dully

16:46 PM, 7th December 2015
About 3 years ago

Hmm,
Well Barclays would be first, for the publicity.

Who has BTL from Barclays?
Use a broker instead, they usually earn their fee.

Jon Pipllman

16:58 PM, 7th December 2015
About 3 years ago

Coventry (Godiva) announced something similar today, for LTV >65% it goes from 125% at 5% to 125 at 5.5%

£52 and change more rental income needed per £100k borrowing under the new regime

steve p

3:05 AM, 8th December 2015
About 3 years ago

This would seem to be a more effective way of limiting potential liability to the banks in a down turn than the stupid Alice tax.

Neil Patterson

8:21 AM, 8th December 2015
About 3 years ago

I totally agree Steve


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