In response to incoming tax changes for the buy to let market, Santander has applied changes to its buy to let stress tests for higher loan to values (LTV), now introducing a two-tiered affordability calculation for buy to let deals at 60% LTV and over.
From 21st February, the affordability rate for Santander buy to let mortgages will increase from 5 to 5.5%, changing the rental calculation to 125% of 5.5%. For loans under 60% LTV, however, Santander will continue using its existing rate of 5% to determine affordability for landlords.
In line with many lenders’ more prudent approach to lending and affordability, Santander’s has applied its latest changes in response to the current market conditions, as both landlords and lenders alike are now having to review both their business models and rental cover calculations. This is predominantly to ensure affordability assessments remain in line with market changes, such as the additional 3% stamp duty on second home purchases and the phased reduction of tax relief we have seen previously introduced to the sector.
Despite these changes, however, lenders hare continuing to lend a hand to the strained sector by applying further rate cuts to many of their buy to let mortgage ranges. Coventry Building Society, for example, has revealed flexible terms for buy to let fixed and tracker products in its 80% LTV range.
2 year fixed rates at 80% LTV now start at 3.99% with a £999 fee, or 4.99% for a 5 year fix at 80% LTV, both with no booking fee while including a remortgage transfer service. Coventry’s 2 year “Flexx” tracker comes in at 3.79% with a £999 fee at 80% LTV, with the same terms applied.
Elsewhere in the market, New Street Mortgages has become one of the latest lenders to enter the buy to let market, with plans to further expand its distribution channels and broaden its product offerings later this year.