Landbay’s buy-to-let stands firm amid independent economic stress test


John Goodall, Landbay

Specialist buy-to-let lender Landbay has conducted an independent stress test against the Bank of England macroeconomic scenarios to project the impact of a severe economic downturn on its outstanding loan book.

These stress tests, which explore what is effectively the economic ‘worst-case’ scenario, are usually only undertaken by the UK’s largest banks and building societies such as Barclays, HSBC and Nationwide to fulfil regulatory requirements.

However, as part of its commitment to help people understand what they are investing in, Landbay commissioned MIAC Analytics (MIAC) to provide the independent analysis of its £235m residential buy-to-let mortgage portfolio. This was achieved by assessing the chance of a default on any loan in the portfolio and the potential impact on portfolio performance.

The scenarios are designed by the Bank of England and aim to explore the capital adequacy of the UK’s major banks and building societies.

The ‘stress’ scenario simulates the following:

  • A recession with GDP falling by 5%
  • Unemployment rising to 9.5%
  • House prices falling by 33%
  • Base rate of interest rising to 4.25%
  • CPI Inflation rising to 5%


The effects of this are measured over a 14-year period until 2032 and consider any need to repossess and sell-on properties due to defaults.

Landbay’s reserve fund would cover a portion of the losses, so even under this stress scenario investors are well protected. Today, Landbay offers up to a 3.54% return. In the stress test circumstances this rate would drop to an average of 3.13% per year.

John Goodall, pictured, CEO, Landbay said: 

“We’re very pleased with the results of this stress test as it demonstrates the robustness of our loan book and the strength of our underwriting process.

“We believe that undertaking these stress tests, and sharing the results, is the responsible thing to do. It supports investors as they seek strong, sustainable returns across economic cycles.

“We’ll continue to undertake these tests on an annual basis, with the intention of being fully transparent about the process and results to investors or borrowers, or anyone just trying to find out more about the business.

“We’re proud to do the right thing by investors and hope this will prompt others in the industry to follow suit.”