27th
Jan 2017
Lenders are being called upon by landlords to support longer term tenancies, following a denial from the Council of Mortgage Lenders regarding a 'political criticism' of their stance towards members over tenancy periods.
Towards the end of last year Tory MP Will Quince had accused the CML of being one of main reasons that tenancies of more than one year were being blocked by lenders.
Will Quince said: "The stumbling block here is in fact the Council of Mortgage Lenders and insurers, which say that a tenancy of more than one year is not permissible in case the mortgage holder defaults and they need therefore to sell the property as quickly as possible to recover their losses."
The local government's under-secretary, Marcus Jones, wholeheartedly agreed with the MP and supported him by saying: "That is one of the challenges for residential landlords, particularly buy-to-let landlords, who are restricted by the terms of a particular mortgage product they take."
The Council of Mortgage Lenders denied the allegation and called upon the housing charity Shelter's research that the financial organisations which accounted for the majority of buy-to-let mortgages in England, were allowing landlords to offer out tenancy periods of up to three years, and apparently some stated that they did not offer any limit at all.
The CML commented: "Meanwhile, we have supported measures to make longer tenancies work more effectively. As Shelter has said, any landlord wanting to offer a longer tenancy should be able to find a suitable lender. And anyone renting should be able to ask their landlord for a longer term, confident that lending conditions aren’t going to be a barrier."
Bernard Clarke, the CML's communications manager said that organisation had sent out letters to each of the MPs that took part in the debate, to inform them that a large number of its members were more than happy to agree to BTL mortgages for landlords who wanted to be allowed to offer longer tenancies.
The spokesperson for a group of landlords strongly believes that CML members should help support landlords more and said: "The truth is somewhere in the middle. Five or six years ago it was a lot more restrictive and almost all lenders had a one-year limit on ASTs. In the past few years, partly because of the efforts of the CML, these restrictions have been eased. Now most lenders set the maximum at 24 months, but they could go further."
The spokesperson concluded by saying: "You will have a lot of landlords still sitting on mortgages that were issued pre-credit crunch and have very low rates –such as lifetime trackers at 1 or 1.5 percentage points above base rate. They won’t give those up easily. Most lenders would love to see landlords move off those preferential rates."
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