Teachers BS amends buy-to-let requirements

Teachers BS amends buy-to-let requirements

Teachers Building Society has made changes to the maximum age and coverage ratio of its buy-to-let (BTL) mortgages.

The changes include an increase in maximum age at the end of a mortgage term to 83 and a rise in the maximum term of a mortgage to 40 years. 

In addition, the standard BTL coverage ratio for lower rate tax payers has been reduced from 145 per cent to 125 per cent. 

For those looking to remortgage an existing BTL, the loan to value has been increased to 75 per cent. 

The amendments have been made in order to provide intermediaries with clear guidelines on requirements for all BTL mortgages and remortgages, the firm said. 

Andy Yates, business development manager at Teachers Building Society, said: "In addition to the recent launch of our Holiday Let criteria, we have made some changes to our BTL criteria.

"The increase to our maximum age and the reduced rental coverage are designed to improve our criteria, support landlords looking to purchase or remortgage and act on our broker feedback.

"Reducing the coverage ratio will help support landlords following cuts to BTL tax relief introduced by the government in 2017 which become fully implemented in the 2020/21 tax year."

Landlords have been subject to a number of regulatory changes in recent years, with the introduction of an additional 3 per cent stamp duty surcharge on second homes in April 2016, which was closely followed by phased cuts to mortgage interest tax relief.

Buy-to-let borrowers are also now subject to more stringent affordability testing under the Prudential Regulation Authority's tightened underwriting rules. 

The Intermediary Mortgage Lenders Association (Imla) warned the changes would begin to have an effect on property availability and tenant choice in the rental sector, as landlords feel their effects for the first time in this year's tax returns.

David Hollingworth, associate director at L&C Mortgages, said: "There’s often a lot of focus on new and improved interest rates but mortgage advisers are just as interested in lender development of their criteria. 

"These changes from Teachers BS show it’s focused on ensuring it continues to meet the needs of brokers and customers alike.  

"For example increasing the maximum age at the end of the mortgage term is an area where the market has seen improvements and it makes sense for Teachers to improve its flexibility in this area.  

"Similarly offering a more individualised approach to landlords depending on their tax status is something that helps keep their offering relevant to a wide audience."