It is the first mainstream lender to offer this option. Most lenders currently restrict buy-to-let borrowers to offering a maximum contract of 12 months.
TMW managing director Henry Jordan said: “The private rental sector has grown and changed phenomenally over the last few years, with rising numbers of families looking to rent in particular.
“We want our buy-to-let customers to be in a position to be able to meet the changing needs of the market.”
The lender expects the permission for longer-term contracts, which may last up to three years, to be welcomed by landlords renting to families. According to Shelter, families now make up one in five of those renting.
National Landlords Association head of policy Chris Norris said the organisation welcomed Nationwide’s decision: “According to the NLA’s tenant research, almost half of tenancies last in excess of four years which suggests that the current assured shorthold tenancy serves tenants’ needs as well as providing the flexibility that many seek from the private-rented sector.
“Research from the NLA Landlord Panel shows that four in five landlords would be willing to offer longer tenancies to existing tenants with a good track record. However, many landlords remain restricted by the terms of their borrowing and are unable to adapt their tenancy agreements to use existing tenure options to their full extent.”
Shelter chief executive Campbell Robb said it was encouraging Nationwide was leading the mortgage industry to make renting more stable: “We look forward to other mortgage lenders following suit.”