Barclays to increase rental coverage ratio from 135 to 145 per cent

In response to government changes to landlord tax relief, Barclays Mortgages is the latest lender to increase its buy to let rental cover requirements.

The lender’s current rental coverage ratio is set at 135%, however as from 26 May this will be increased to 145%.

Barclays will continue to carry out income and expenditure assessments, however, which review whether a buy to let borrower can use their earnings to cover a shortfall in rental payments.

The bank will also reduce its stress rate from 5.79% to 5.5%.

A spokeswoman for Barclays said:

“As a responsible lender, Barclays Mortgages wants to ensure that aspiring landlords can continue to meet all their financial commitments and are protected as they look to invest in buy-to-let over the long term.

“Customers will continue to complete a full income and expenditure assessment and we will continue to allow personal disposable income to make up any shortfall in the rental cover calculation.”

The news from Barclays follows similar announcements from The Mortgage Works, Keystone and Foundation Home Loans, all who have all increased their rental coverage ratio for individual borrowers in recent weeks.

Existing Barclays Mortgages customers will be unaffected.


You may also like to read:

Why The Mortgage Works was right to increase its income cover ratio

Keystone to introduce split stress tests

FHL to increase buy to let stress test for individuals  


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