All of the lender’s existing buy-to-let (BTL) criteria will remain in place for the property being applied for, including minimum interest coverage ratio, maximum number of BTL properties per household and loan-to-value (LTV) limits.
In addition, Coventry will assess all the properties in the applicant’s portfolio by means of a downloadable form that will capture information such as the value of each mortgage, monthly mortgage repayments, monthly rental amounts and estimated property values.
A maximum LTV of 65 per cent will apply across the whole portfolio, alongside a minimum interest cover ratio (ICR) - including properties mortgaged with other lenders - of 125 per cent, based on a reference rate of 5.5 per cent.
No single property will be permitted to fall below an ICR of 100 per cent.
Portfolio landlords must have acquired their first BTL property more than 24 months before the current application, and no more than three properties prior to the current application should have been acquired within the last 12 months.
The rules, which apply to landlords with four or more properties, have been introduced ahead of the Prudential Regulation Authority’s deadline for stricter underwriting standards on 30 September.
Kevin Purvey, director of intermediaries at Coventry, said: “While intermediaries are adjusting to our new approach to portfolio landlords, we will of course be here to help. Brokers can visit our website for full details of the changes to lending policy and the application process, or call the intermediary support team.”
Nick Green, broker at Coventry-based Alternative Estates and Financial Services, said it was good that lenders were coming out with the information but expressed reservations about its impact on brokers’ workloads.
He added: “It will be a lot more work for us as brokers, so fees we charge clients may have to be reviewed. Also, the work involved for the lenders to underwrite is really going to restrict who has access to the products.
“I have one landlord with 55 properties – are they going to calculate every single one? How much time and effort, and how much paperwork will that be?
“All the lenders have to do this, but it is how strict they will be with the valuation, and it is down to the broker to give the right information and the client to give it to the broker. It will be an awful lot of data capture.”
A number other lenders have outlined their approach to portfolio landlord underwriting standards in recent weeks, including Accord, The Mortgage Works and Aldermore.