But London-based broker Tony Silver said he had given up using the bank after claiming it stress tests on a repayment basis, rather than at 5.5 per cent on an interest-only basis which he claimed is the norm for other lenders.
He added that Barclays also stress test any residential mortgage in the background at an “unrealistic” 6.99 per cent.
As a result, cases that are processed by other lenders without any difficulty are declined by Barclays, Mr Silver claimed.
But the bank defended its buy-to-let offering, denying stress testing on a repayment basis and claiming its affordability rules had been drawn up to comply with stricter Bank of England (BoE) regulations.
A number of lenders have stopped lending to portfolio landlords – those with four or more properties - following a wave of tax and regulatory changes, including the introduction of more stringent underwriting rules and the gradual phasing out of tax relief on mortgage interest.
Santander and Platform – the buy-to-let arm of the Co-op Bank – will no longer accept applications from these borrowers.
But Mr Silver said Barclays had effectively dropped out of the buy-to-let market without telling anyone.
He said: “They have all these low headline rates, but if they don’t want to do lending, they change the underwriting criteria and it stops everything, which is madness.”
“Stress testing is hard enough as it is – don’t do it on a repayment basis.
“The whole point of buy-to-let is it should be able to stand on its own two feet. If it can’t, then don’t do it. Yes, make sure someone can afford all their liabilities. What are they doing, stress testing residential at an inflated rate?
“I will just avoid them in future. There is no point in putting something into the system that is not going to go through.”
A spokesperson for Barclays said underwriters stress test new residential lending at 6.99 per cent due to regulatory guidance from the BoE Financial Policy Committee.
This states that it should be tested at 3 per cent above the lender’s follow-on tracker rate – currently 3.99 per cent for Barclays.
The spokesperson added: “On buy-to-let properties, we stress affordability at 5.5 per cent. The stressed monthly repayment amount is calculated on an interest only basis, and we also perform a check against the outstanding balance plus 3 per cent on an interest-only basis, using the higher of these two values.
“We also calculate the 5.5 per cent on a repayment basis in the background, but this figure is only used in affordability where it is lower than the output of the first two calculations.”
But Mr Silver was adamant he had been told by Barclays’ call centre in Mumbai that mortgages were stress tested on a capital repayment basis - even though the buy-to-let mortgage would be on interest only - and the underlying residential mortgage was also stress tested at 6.99 per cent.
However Martin Stewart, director at financial advice firm London Money, said he has "little sympathy for whinging at lenders for their policies".
"I have always maintained the lender has every right to adopt whatever criteria they want in order to deploy their capital in whatever way they see for in order to maximise return whilst minimising risk.
“Barclays are very good when it comes to top slicing and have, in many cases, absorbed a lot of lending where others have failed - particularly in London."
Top-slicing is where a buy-to-let lender uses a borrower's personal income to top up any shortfall in rent which is needed for the borrower to obtain the loan amount they require.
“The landlord market will polarise between the amateurs and the professionals, and the same will happen with the lenders. I think long term some lenders will exit BTL lending in the hunt for better returns, and later-life lending would be the obvious place to start," Mr Stewart said.
“In the interim, the banks are free to pick and choose the lending they want to do, and if brokers have a problem with that I suggest they step in and lend their own money instead.”
simon.allin@ft.com
