Skipton tightens affordability tests for portfolio landlords

Skipton Building Society has announced stricter affordability testing ahead of the coming deadline on PRA guidance for lending to portfolio landlords.

The lender will increase its interest cover ratio (ICR) for portfolio landlords from 145% to 150%, stressed at 5.5% (or 5% for five-year fixed rate products).

Additionally, clients that qualify as portfolio landlords will need to meet a minimum income threshold of £45,000 per annum, including rental income. Under previous requirements, clients would need to earn a minimum of £20,000 per annum, but this could not include income received from rent.

The majority of Skipton's existing criteria will remain unchanged, including Skipton's requirement that clients have no more than ten properties total, of which no more than five may be mortgaged with Skipton. Full details of criteria changes and extra documents required will be announced ahead of the PRA deadline.

Paul Darwin, Skipton's director of intermediary lending, said:
"Whilst being mindful of these new rules, this is very much business as usual for us. We have a great deal of knowledge and experience in this area of lending, and this is more a case of aligning our existing BTL portfolio proposition with the new requirements than anything else."

He added:

"We know how important it is for our broker partners and landlords to have all the support they can from us. As a result, we'll be rolling out our new underwriting requirements shortly to enable brokers to test drive and become familiar with everything in their own time."



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