Buy-to-let  

Online rental calculator helps lender's business double

Online rental calculator helps lender's business double

Specialist lender New Street has seen business double since the launch of an online calculator aimed at the buy-to-let market.

The online calculator was launched on 28 March as part of a raft of changes to New Street’s buy-to-let proposition, including a cut in its rental cover rate from 145 per cent to 125 per cent and rate reductions of up to 0.7 percentage points.

The calculator enables intermediaries to ensure rental calculations are tailored to landlords’ individual circumstances, taking into account factors such as tax rate, property location, property price and whether ground rent and service charges are payable.

Gerry Bell, head of marketing at New Street owner The Northview Group, told Financial Adviser: “Since 28 March business has doubled. [The product] has had a very positive impact on the market.”

A similar buy-to-let calculator was recently launched by Kensington Mortgages, which is also owned by The Northview Group, to show the maximum amount customers can expect to borrow based on their circumstances.

The buy-to-let market faces more tough times ahead with the introduction of new underwriting standards by the end of September, mandated by the Prudential Regulation Authority (PRA) – but Mr Bell was optimistic about the sector’s prospects.

“Come September we will have an appropriate offer in terms of how to comply [with the PRA rules] and look to segment that market where we can offer the best proposition to different niches. That will be the next stage,” he said.

“I think buy-to-let is here to stay. Lenders have been really innovative and creative. Will it grow as it has done? No. But there will be more promise for first-time buyers and Help to Buy.

“Buy-to-let, since 1995-96, has been a huge investment opportunity for lots of landlords and a lot have done very well out of it.

“The worry is there is more to come from the regulators. They have done buy-to-let to death and it is time for the industry to address how to reposition that offer.”

Paul Dorward, mortgage adviser at Sheffield-based PAD Financial, commented: “For some time lenders have had their own affordability calculators for residential deals, so now the buy-to-let market has become open to interpretation of the rules around lending it makes sense to have a calculator.

“I expect to see a lot of lenders having calculators to show what they are willing to lend based on a client.”

simon.allin@ft.com