The Mortgage Works (TMW) has set out further details of its underwriting approach for portfolio landlords with less than a week to go before the 30 September deadline.
In June, Nationwide’s buy-to-let arm confirmed the interest cover ratio for portfolio landlords – those with four or more properties - will be fixed at 145 per cent, with houses in multiple occupation (HMOs) remaining at 170 per cent.
It has now stipulated that for portfolios of 10 properties or less, the aggregate stress rate for all properties will be 4.5 per cent, while for 11 or more properties, or where the total borrowing with the Nationwide Group is greater than £1m, the aggregate stress rate will be 5.5 per cent.
In addition, like-for-like remortgage applications will be excluded from portfolios of less than seven properties and will not be subject to portfolio landlord criteria.
Details about the additional documents required by TMW, in response to the Prudential Regulation Authority’s (PRA) guidelines, have already been revealed.
Paul Wootton, managing director of TMW, said: “We have taken a pragmatic and considered approach to the introduction of the new PRA standards, drawing on our long experience in the portfolio sector.
“We have invested in a new online system and a dedicated portfolio team to support the process, as well as offering clear and ongoing guidance to both landlords and brokers from an early stage to help them prepare for the new rules, amid a range of changes affecting the buy-to-let sector.
"The aim is that for many landlords and brokers it will be business as usual.”
Steve Olejnik, chief operating officer at Kent-based Mortgages for Business, said: “I think they are making it up as they go along.
"I have not seen that seven properties rule before. I think in the original documents the PRA said like-for-like remortgages should not be penalised, but it is up to each lender whether they want to take on another lender’s problems or not.
“They are being more prudent than the PRA are looking for.
“Because the PRA have not given a specific rule it is up to lenders to come up with their own rules. It does not surprise me that lenders are applying different stress tests to background portfolios."
simon.allin@ft.com
