15th
May 2017
According to the survey from a mortgage distributor, increasing numbers of landlords are being told by their lenders that they are not allowed to give tenancies to people on housing benefits.
The market analysis carried out on behalf of an association, found that nearly two thirds of the major buy-to-let lenders who enjoy a 90% share of the market, bar their landlord clients from renting properties covered in their buy-to-let mortgage agreement, to any tenant that claims benefits.
The research investigated 58 lenders’ buy-to-let mortgage policies for a two-bedroom flat with the caveat that the prospective tenants would be claiming housing benefits. The distributor found that out of the 58 lenders around two thirds (38) would not allow the buy-to-let properties to be rented to benefit claimants.
Doug Hall, director of the mortgage distributor, said: “Some of the reasons given for not lending to those renting to claimants include concerns about rent not being paid and historic data which calculate the risk of tenants falling into arrears or facing repossession.”
The association will ask the new government to consider whether they can stop this industry practice by helping landlords.
A spokesperson for the association said: “Discrimination against tenants receiving benefits is not driven by landlords but by the banking system.
“If the private rented sector is to house more people then barriers to landlords making fair decisions over who they rent to must be removed.”
The association wants the government to pay the benefit tenants' rent direct to the landlord.
The spokesperson commented: “We need a system which gives tenants, landlords and lenders the confidence they need that rent will be paid on time and in full".
Richard Merrick of PIMS, said:" The government's Universal Credit payments system needs a shake up, we have asked time and time again why can't the government take on the same process as in Northern Ireland and possibly Scotland, whereby tenants on benefits should have their rent paid direct to their landlords?
"There is a new fully enhanced digital Universal Credit system that will be rolled out nationwide and from first impressions it does look comprehensive however it does not, at the moment, have any fields that could allow rent payments going direct to landlords,
"It needs to be changed."
News Archive »