Buy-to-let lenders have spent the past six months quietly coming up with ways to help landlords borrow more on their mortgages.

In the past few weeks alone, both Virgin Money and specialist lender West One revealed they will now allow landlords applying for a buy-to-let mortgage to use both the property's rental income and their own earned income to get them past tough affordability thresholds.

The approach - known as 'top-slicing' - is on offer from a growing number of buy-to-let lenders including Barclays, BM Solutions, Precise Mortgages, Vida Homeloans, Kent Reliance, Aldermore and Metro Bank.

Mo Farah at this year's London marathon, sponsored by Virgin Money - the latest lender to relax lending rules for Britain's buy-to-let landlords

It has become more popular after the Bank of England introduced stricter affordability rules on buy-to-let lenders in January 2017.

This saw nearly all lenders require landlords to show that a property's rental income was equal to 145 per cent of the mortgage payment if the interest rate paid was 5.5 per cent.

Previously this calculation - known as the interest coverage ratio - had been set around 125 per cent at 5 per cent across the board.

Part of the reason behind the move was to reflect growing pressure on landlords' profits following the removal of key tax reliefs by the former chancellor, George Osborne.

These started to hit landlords' profits in April 2017, in some cases significantly reducing the monthly income earned on buy-to-lets.

However, from around October last year lenders began to offer some landlords more flexible affordability criteria.

In cases where a landlord's overall income pushed them into either the 40 per cent or 45 per cent tax bracket, the ICR on a property could be set somewhere between 125 per cent and 145 per cent if the landlord could show they had other earned income that would top this ratio up to the full 145 per cent.

Should you use extra income on buy-to-let?

Now top-slicing has gone further still. West One for instance allows landlords to use other income to top up where rental income covers the mortgage by just 100 per cent.

Virgin Money meanwhile flexes its ICR between 100 per cent and 145 per cent dependent on the amount of supplementary income and providing earned income is more than £50,000.

Jeni Browne, of mortgage broker Mortgages for Business, said: 'Top slicing is not new. The likes of Metro Bank and Barclays have been using it for a long time and now, as regulatory guidelines are forcing lenders to apply more onerous rental calculations, we are seeing more lenders moving into this space.

'This works really well for those who are medium to high income earners, have minimal borrowing and three or fewer buy-to-let mortgages. Top slicing has enabled many borrowers to reach their desired objectives, particularly when a more tick-box approach has failed them.'

Be wary of top-slicing on buy-to-let portfolios

But Browne also warned that taking this approach could have a major 'sting in the tail' for landlords.

'For those with four or more mortgaged buy-to-lets, lenders are required to assess the landlord’s entire portfolio and ensure that they are comfortable that the existing arrangements can withstand rental voids, interest rate rises and the tax changes.

'To this end, the properties already in the portfolio are also subject to a rental calculation and so having a mortgage which relies on top slicing in the background could mean that you fall outside of the lender’s parameters.'

She gave the following example: some lenders will insist that each mortgaged property already in the portfolio works on a rental calculation of between 125 per cent and 145 per cent assuming an interest rate of 5.5 per cent.

While top slicing is a wonderful facility, it is wonderful only for the right landlord. Jeni Browne

Other lenders may need the portfolio to work in aggregate on this basis. And some lenders simply run a calculation, which they don’t share, to make sure that the numbers work for them.

'While top slicing is a wonderful facility, it is wonderful only for the right landlord,' she said.

'Those who have no intention of having four or more buy-to-let mortgages, or those who might use it as a temporary facility where they would be able to reduce the debt down before they make their fifth acquisition with a buy-to-let mortgage.'