Barclays has reported that it will raise its rental coverage ratio by 10% to 145%.

According to the press release, it will continue to carry out income and expenditure assessments, allowing customers put disposable income and bonuses towards any shortfall in rental cover.

Barclays also announced that it is reducing its stress test from 5.79% to 5.5%, explaining: “These changes are being introduced as a result of the reduction in landlord tax relief available from next April (phased in over four tax years). As a responsible lender we want to ensure that your clients can afford their repayments plus, other costs associated with the property where the borrower is responsible for payment such as, council tax and management/letting fees.”

Earlier this week, Foundation Home Loans announced that it is changing the basis of its rental calculation for individual applications from 125% to 145%.

Despite concerns, the industrty has said that increases in buy-to-let stress test levels should not be viewed as an ‘Armageddon moment’ for the sector.

Speaking at FSE Manchester yesterday, David Whittaker, Managing Director of Mortgages for Business, suggested that when making a historical comparison the maximum leverage available to borrowers was not being significantly impacted.

Commenting on TMW’s recent move from 125% to 145% Whittaker said: “[Given] this is supposed to be a ‘seismic shift’ that we’re all worried about, with 145% [on an average yield] of 5.8% the maximum leverage available is still 73% LTV. Since January the yield has not changed and the maximum leverage is down from 84%, but the product limit was 80% anyway. This is not an Armageddon moment.”

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