Castle Trust to stress test portfolio buy-to-let with tiered ICRs

Ryan Bembridge

August 8, 2017

Castle Trust will cater for portfolio buy-to-let applicants using tiered income coverage ratios for individual applicants after the 30 September deadline.

While limited company landlords will be stress tested against an ICR of 125% at 5.5%, for individual applicants this will rise to 130% for a 1-year term, 135% for a 2-year term, 140% for a 3-year term and 145% for 4 and 5-year terms.

The lender will also ask brokers to fill in a ‘portfolio landlord statement’ detailing their assets, liabilities, property schedule and business plan.

OneSavings Bank clarifies portfolio landlord changes

Matthew Wyles (pictured), group executive director at Castle Trust, said: “The PRA’s requirement for underwriters to take a proportionate approach to portfolio landlords, based on their knowledge of the borrower, is simply an articulation of sound commercial lending.

“Castle Trust has always specialised in larger, more complex buy-to-let portfolios and so the provisions of SS13/16 are just business as usual for us.

“This said it is important that we are clear and transparent with the market and so, by laying out our approach and the portfolio rental calculations that we use, we can eliminate any element of doubt.”

Holiday lets are always subject to a 150% stress test.

Under terms from the Prudential Regulation Authority a portfolio landlord is defined as someone with interest in four or more mortgaged buy-to-let properties.

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