Another lender introduces stricter criteria for landlords

Another lender introduces stricter criteria for landlords
Barclays has become the latest lender to impose more stringent checks on landlords looking for mortgages.

From 26 May, the bank will increase its rental cover requirements, which means that landlords will need to receive more in rent relative to their mortgage costs.

But the lender will continue to carry out an income and expenditure assessment to see if borrowers can use their earnings to cover any shortfall in rental cover.

At the same time it will reduce its stress rate to 5.5% from 5.79%.

The announcement follows last month's decision by Nationwide to tighten its criteria for buy-to-let landlords.

The Mortgage Works, the building society's specialist buy-to-let arm, announced that it would require landlords to receive 145% on their mortgage costs in rental payments, an increase from 125%.

In a note to brokers, Barclays said that the changes are being introduced due to the reduction in landlord tax relief from April.

A Barclays spokesperson said: "As a responsible lender, Barclays Mortgages wants to ensure that aspiring landlords can continue to meet all their financial commitments and are protected as they look to invest in buy-to-let over the long term.

"Customers will continue to complete a full income and expenditure assessment and we will continue to allow personal disposable income to make up any shortfall in the rental cover calculation."

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