The Residential Landlords Association (RLA) is urging the Government to intervene to stop mortgage lenders discriminating against Universal Credit claimants after a buy-to-let investor revealed that NatWest had revoked her mortgage because she is renting to a benefit claimant.
The RLA has written to John Glen, Treasury minister responsible for banking, calling for the Government to use its influence in state-owned banks to stop this practice.
It is also calling for a Financial Conduct Authority investigation and for the Equalities and Human Rights Commission to undertake a review of whether such practices breach equalities law.
David Smith, policy director for the RLA, said: “With growing numbers of benefit claimants now relying on the private rented sector, it is shameful that many lenders are preventing landlords renting property to some of the most vulnerable in society with little or no justification.
“The banks have had long enough to get their house in order. It is now time to take firm action to stop such unjust practices.”
It was reported earlier this month that after approaching NatWest to remortgage her current buy-to-let loan with the bank, Helena McAleer was told that she would either have to evict her tenant or pay the early repayment charges and forego the mortgage as it was the bank’s policy not to allow rentals to benefit claimants.
The bank’s own buy-to-let eligibility criteria states: “We will not consider multiple tenancies, homes of multiple occupancy, bedsits, DSS tenants or related person tenancies.”
Digital mortgage broker Habito, which arranged the home loan, has since said it will cover the charges and sort new finance for her.
McAleer has also established a campaign page on Facebook and a parliamentary petition calling for measures to tackle such practices, which has more than 1,500 signatures so far.
Comments (10)
“The banks have had long enough to get their house in order. It is now time to take firm action to stop such unjust practices.”
I would argue that the government have had long enough to get the HB system in order, maybe before expecting the landlord and banks to put themselves at financial risk they should get their s*** together and make it a system that works for all…
Who’da thunk it? Lenders don’t want BTL mortgages where the tenants can’t afford the rent? I don’t know about anyone else, but here in West Lancs the DSS/LHA doesn’t come close to paying market rents.
It’s not discrimination, it’s basic affordability.
I am pretty sure there are better things for the RLA to be campaigning for
I’m sorry, but I think that the Lenders need to stand firm and refuse, until the government and the Councils reduce the risk that letting to benefit tenants brings. My view is that it is down to the issues of the system that landlords don’t want benefit tenants. If the money goes to the Landlord and it is wrongly calculated, the Landlord has to repay it and try and get it from the tenant. If it goes to the Tenant, then there is no guarantee that they will pay it, although I appreciate it is the same with those who earn their own money.
The Lenders are in a bargaining position to actually help the industry, and I hope they use it…
If UC was paid directly to Landlords in all cases and Landlords able to get information with regards to a tenant’s claim, then this would resolve most of the issues surrounding HB cases.
It is the lack of information or misinformation from tenants that often result in Landlord having no option but to evict tenants.
These same Landlords then are clearly more risk averse to these type of tenants across their portfolio resulting in few properties becoming available.
A landlord or their lender should be able to decide what level of risk they are prepared to take.
Rental property losses can result in many thousands of pounds lost – and landlords are often not the wealthy individuals that the likes of Shelter would have you believe.
Moreover, councils use claw back provisions if tenants have been telling porky pies! One of my tenants recently had to claim benefits and the council wanted to pay the rent to me directly, I refused as I do not agree with claw back and if the tenant did not pass it over and increased her rent arrears notice would be served.
I was under the impression that lenders can’t revoke mortgages where they have stipulated ‘no DSS’ because the DSS doesn’t exist anymore. Correct me if I’m wrong.
There is reason lenders don’t like HB tenants: it’s called risk.
The best way to manage this risk is for the benefit provider to underwrite any rent arrears and potentially recover the debt from the tenant. This way it can work for the benefit of all. It’s not fair for the landlord to carry all the risk.
I think the problem lies with the RLA facts recently published that 61% UC tenants are in arrears
who can blame banks with this track record for protecting their security and landlords from this
I presume that Shelter now will be encouraging their “followers” to now get on the blower to Natwest, calling them out for discriminating against people, arranging for action groups to picket their branches……no….i didnt think so.