New rules for buy to let rental stress testing

You may, or may not, be aware that the Prudential Regulation Authority (PRA) has been considering changes to buy to let rental stress testing recently, affecting buy to let mortgages across the UK.

Responsible for the prudential regulation and supervision of lenders, the PRA have now proposed that banks should be operating a standard stress for every case, which could be a minimum of 5.5% at 125%, or perhaps even higher.

This is yet to be set in stone, however could prove unfortunate for some landlords and properties in London, as the average rental yield currently stands at 3-4%. This means clients with either a 70% or 75% loan to value (LTV) property are likely to struggle more when it comes to remortgaging.

If landlords wish to release equity in order to further fund buy to let properties, they will have to do so quickly or risk fending for themselves later on. The market has consequently witnessed increased levels of remortgages across London, especially from those with buy to let portfolios.

Remortgaging to release equity is one of the best moves you can make in the current climate and something we can help you with. Many lenders have equally been offering enhanced service in this space as a result.

Precise Mortgages, a lender we have an excellent relationship with, is currently offering ‘pay rate’ deals on lifetime trackers and 5 or 10 year fixed products, now starting from 3.67%. This means the stress test becomes 3.67% at 125%, providing much greater scope for releasing maximum equity – as long as the client has a track record of at least 1 or more buy to lets.

Equally, Kent Reliance is offering a 2 year discounted variable rate aimed exclusively at limited company buy to lets. Available up to 65% LTV with no early repayment charges (ERCs), Kent Reliance is currently using a rental calculation of 3.59% at 125% for this product, compared to many lenders previously raised rental calculation of 5.5% at 125%.

The buy to let space has certainly proved the chameleon of the mortgage market, witnessing more changes than most. However, there are still many beneficial deals available when sourced in the right way.

With many using uncertainty in the market as a reason to hold-off on taking any action with their mortgage, we would wholly recommend remortgaging now and reaping the benefits of a more beneficial rate – especially with these potential buy to let changes pending.
If you have any questions on this article, or the buy to let market in general, please do not hesitate to contact us. Our experts are on hand anytime to assist you.

Blog from Enness Private: Blog in full here.

Enness Private

We arrange large mortgages secured against international property for global individuals.

You May Also Enjoy

Breaking News

Popping the Asking Price Bubble

Where in the Uk Can Buyers Snap Up Property Bargains and Where Properties Go for a Premium Above Asking Price   New research from fast selling property company, Upstix has uncovered the UK’s most surprising postcodes for snapping up a property at bargain prices this year, highlighting a widening gap between sellers’ expectations and the…
Read More
Rightmove logo
Breaking News

Highest demand to lease office space since pre-pandemic

The latest insights from the UK’s number one commercial property website Rightmove, reveals that the number of unique enquiries to lease office space is at its highest point since pre-pandemic, as businesses look for spaces that meet modern requirements. Demand to lease office space is 19% higher than the same period a year ago and…
Read More
Planning disputes on new build land
Estate Agent Talk

Planning consultations for major infrastructure to be streamlined

Robert Bruce, a planning and infrastructure partner at law firm Freeths LLP, said he: “Welcomed the change as a significant step to speeding up the DCO process and the focus on the quality and effectiveness of the consultation, rather than box ticking and a risk averse approach to pre-application consultation due to the current legal…
Read More
Breaking News

‘The property ladder pulls further away’ warns Open Property Group

For many first-time buyers across England, the dream of homeownership continues to slip further out of reach. Despite rising wages, soaring house prices are making it harder than ever to get on the property ladder. A leading UK professional house buying company ‘Open Property Group’ based in Buckinghamshire UK, has raised concerns over the ongoing…
Read More
Estate Agent Talk

How Long It Takes to Buy a House in the UK: 5 Common Delays That Can Slow Down Your Home Purchase

Wondering how long it takes to buy a house in the UK? The average timeline ranges from 8 to 22 weeks, but even that can stretch significantly due to unexpected delays, especially if you’re a first-time buyer or caught in a chain. That’s why working with experienced professionals like Belvoir — one of the UK’s…
Read More
Love or Hate Rightmove
Breaking News

Rightmove to host Renters’ Rights Bill webinar with Guild of Lettings

Rightmove is hosting a live and interactive webinar session with the Guild of Lettings to help agents get Renters’ Rights Ready. The webinar will take place from 10:00am – 11:00am on Wednesday 23rd April. Susie Crolla, Managing Director for the Guild of Lettings, will be joining Rightmove to help agents with questions they may have about…
Read More