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LETTINGS NEWS: New landlords must show rent will cover 145% of mortgage payments

01/07/16

Another lender, the TSB, has changed its rules regarding buy to let mortgages.

Like several other finance houses, it now requires landlords to show that the rent they will receive on a property will cover 145% of the monthly mortgage payments.

This is because banks and building societies want a stable market where landlords, especially new ones, do not over-stretch themselves and find that a lengthy period between tenants (a so-called ‘void’) means they cannot meet their mortgage payments.

This 145% threshold is achievable in many cases – especially in today’s relatively strong and growing rental market – and it should be seen as a safeguard, not a deterrent.

However, it shows the need for a new landlord to obtain a realistic valuation of how much rent a flat or house would attract; this is best done by an experienced local letting agent.

 

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