Business Irish

Friday 28 July 2017

Bank of Ireland relaxes buy-to-let rules - but only in UK

Bank of Ireland headquarters in Dublin
Bank of Ireland headquarters in Dublin
Donal O'Donovan

Donal O'Donovan

Investors earning less than £25,000 (€29,000) a year will be eligible for buy-to-let property loans from Bank of Ireland, after it cut lending rules at its UK arm that lends through brokers.

The Bank of Ireland for Intermediaries' mortgage business in Britain said it has removed a £25,00 minimum income requirement for UK buy-to-let lending, this week. The bank said it will also lend to older borrowers and boosted the maximum it will lend for buy-to-lets to £1.5m.

At the same time the bank tightened loan-to-income standards that limit how much an investor can borrow based on their income.

Bank of Ireland said the move brings it in line with the UK market.

"We are introducing these changes to further support our business, building strong propositions in our chosen markets and in response to feedback from our intermediary partner networks. These changes are in line with the wider market and we are pleased to be able to help more customers, whilst maintaining our commitment to responsible lending," the bank said.

The changes include allowing loan-to-value ratios that would not be allowed in the 14pc State-owned bank's home market.

For new-build homes in the UK, Bank of Ireland said it will now lend up to 85pc of the value of the property to buy-to-let investors. It will lend up to 80pc of the value of an apartment. The bank said it will consider lending up to 90pc of the price of apartments in modern high-rise developments.

Mortgage rules set by the Central Bank of Ireland cap lending to buy-to-let investors here at a 70pc of the value of the property.

The Central Bank's loan-to-income (LTI) and loan-to-value (LTV) measures were designed to boost not only the resilience of borrowers to another financial shock, but also protect the banking sector and stop a repeat of the loose lending that led to the Crash.

While Bank of Ireland is regulated in Ireland, the reach of the Central Bank's mortgage lending regime does not extend to the bank's UK lending.

The Bank of England does not enforce a policy regarding loan-to-value ratios, but does have loan-to-income restrictions.

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