United Trust Bank announces flexibility on ‘passing rent’ figures as pressure on ICR calculation for BTL finance grows

25 September 2023

United Trust Bank (UTB) Mortgages for Intermediaries has thrown a lifeline to landlords and Buy-to-Let (BTL) mortgage brokers under pressure to meet current Interest Cover Ratio (ICR) calculations.

Current rent levels coupled with higher mortgage costs has put pressure on lenders’ Interest Cover Ratio calculations, resulting in mortgage applications restricted to LTVs much lower than the traditional 75% LTV.

In response to the issue, UTB will now accept passing rent figures declared by landlords to a maximum of 10% over the rent verified by a valuer. The enhanced criteria apply to all single dwelling types, HMOs and MUBs with immediate effect.

Lenders typically underwrite on the lower of the two figures or just the valuer’s rent assessment, so UTB believes this move will help landlords to secure mortgages and remortgages they may otherwise have struggled to obtain due to the ICR calculation being restricted to lower figures.

The change does not affect underwriting for holiday lets and serviced accommodation as UTB already uses passing rents over the previous 12 months or verification by a holiday letting agency.

Brokers can find details in UTB’s updated product guide:

BTL Product Guide

Caroline Mirakian, Sales and Marketing Director – Mortgages, United Trust Bank said: “We are always looking for ways to help brokers provide the funding their customers need. At present, pressures on ICRs are making it difficult for landlords to obtain the BTL mortgages they need to buy and refinance, and we believe this flexibility on passing rent will make a real difference to brokers struggling to place cases at the upper end LTVs.”