Buy to Let Lenders that do not stress test background portfolio

Published 24 July 2019 · Last reviewed 1 May 2026

The rental coverage of my Buy to Let portfolio is stopping me getting a mortgage

If you are reading this article on “the rental coverage of my portfolio is stopping me getting a mortgage” you are undoubtedly you are feeling frustrated right now. Below I provide an insight to hopefully bring a smile back onto your face.

Just so you know this article forms part of my “my properties are stopping me getting a mortgage series” and other topics include:

Exposure
Commercial usage
Past Habits

Rental coverage

When it comes to appraising a property portfolio there are two distinct camps of Mortgage Lenders:

Mortgage Lenders that are under Prudential Regulatory Authority (PRA)
Mortgage Lender outside the PRA

PRA Mortgage Lenders

To take them, in turn, PRA Mortgage Lenders will normally check that the background properties meet at least one of the following stress tests:

125% based on a notional interest rate of 5.5%. Potentially rising to 140% or 145% depending on your tax bracket.
140% at 4.5%.
Payrate on recently taken out five year fixes.

It could be they look at this as a collective portfolio, or apply the factor to some or all of the individual properties to meet their standard.

What does this translate too? Well to take the first one on the above list: 125% @ 5.5%, this means if you have a portfolio with a combined mortgage balance of £1,000,000 the total rent would need to be least £5,740 per month.

Non PRA Mortgage Lenders

Firstly, I must point out regulation is there to protect consumers so choosing a Non PRA Mortgage Lender might not be for you. However, when you are a portfolio landlord it is likely they you are savvy enough to make your own decisions.

As these Mortgage Lenders are outside the PRA rules they are open to choose their own stress test on background properties. Most will plum for 100% rental coverage. And, in some instances be happy for mortgage properties to be unlet provided there are plans to sell or re-let within a reasonable timeframe.

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Most buy-to-let mortgages are not regulated by the Financial Conduct Authority. A small number of buy-to-let mortgages are FCA-regulated — typically Consumer Buy-to-Let (where the borrower is not acting in the course of a business, such as an accidental landlord who has inherited or moved out of a former main residence) and Family Buy-to-Let (where the property is let to an immediate family member). Limited-company buy-to-let, portfolio buy-to-let and standard personal-name buy-to-let are not regulated by the FCA.

Where the underlying mortgage is not FCA-regulated, the lender's conduct on that loan is not covered by FCA rules and you may have reduced access to the Financial Ombudsman Service for complaints about the lending decision or product terms. However, Niche Advice Limited is a Credit Broker authorised and regulated by the Financial Conduct Authority (FCA No: 750263), and our broking activity — including the introduction we make to the lender — IS FCA-regulated under the FCA's CONC rules. Complaints about our broking service can therefore be referred to the Financial Ombudsman Service in the usual way.