Which? – the
consumer organisation - says a handful of buy to let mortgage lenders have
found a way of helping so-called ‘portfolio landlords’ to borrow more than they
might have expected under tough new regulations.
Last month the
Prudential Regulation Authority tightened the criteria which individual lenders
had to use when handling applications from portfolio landlords - that is, those
with four or more buy to let properties.
But now the
Which? Reports that “a handful” of lenders offering ‘top slicing’ deals, which
allow landlords with low rental yields to make up their shortfall through other
income.
“Top slicing
takes a landlord’s personal income, such as their salary or pension income,
into consideration when assessing their affordability, rather than just looking
at the profitability of their property portfolio. Top slicing is good news for
landlords buying higher value properties which might have lower rental yields,
as it allows them to use external personal income to bridge any shortfall” says
a statement from Which?
With Oxford
prices rising again over the last 12 months by around 6%, and average Oxford
homes costing £414,817, Oxford offers lower rental yields over the initial 3 to
5 years following purchase. As a result,
‘Top slicing’ products would appear highly relevant for landlords aiming to
increase their investment in Oxford property.
The consumer
group says currently the lenders who undertake this are Aldermore, Barclays,
Bluestone, Clydesdale Bank, Coventry, Mansfield, Metro Bank, NatWest, Vida and
Virgin Money.
However, because
of the restrictions imposed on most lenders by the new PRA criteria, some 14
companies have pulled out of the portfolio landlord market completely, says
Which? This includes Santander, the TSB and the Post Office.
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