Since the news of the case between Helena McAleer and NatWest broke last Autumn, we have been supporting Helena’s work with Shelter to end the discrimination of tenants on benefits. The campaign quickly gained momentum and sparked the Housing Enquiry committee hearing on 24 April – chaired by Frank Field MP.
The hearing found widespread discrimination among letting agents and property ad sites, where decent people on state support were being refused rental properties. In February, Frank Field wrote to insurers, property agents, property advert sites and mortgage lenders questioning their policies around DSS (Department for Social Security) tenants.
In November I wrote to the buy-to-let lenders who discriminated against social benefit tenants, asking them to reverse their policy. I pointed out policy flaws, such as the ability to police tenant types and that the decision to lend should be based on the strength of the borrower and the security.
If underwritten properly, there should be no link between the performance of the mortgage and whether the tenant is receiving housing benefit.
I am pleased to report that our plight had some success. At the start of the campaign, out of the 43 lenders we researched (over 95 per cent of buy-to-let lending) around a third of lenders had the restriction in place.
By the end of the year five lenders reversed their policy, with most stating that changes were already underway before the campaigning started. Helena’s campaign, the pressure from Shelter, and letters from Frank Field have since led to more lenders conceding.
Further to go
This is great news, but lenders still have work to do in educating their front-line staff of the changes in policy.
We recently contacted a number of lenders asking whether they had the restriction in place. Several sales reps and help desks told us that they do not permit DSS tenants – when this was challenged on social media we suddenly started to get updates from the lenders saying that they had made an error and that they do now accept DSS tenants.
This shows that these lenders must communicate these changes better to front line staff, and they should make a concerted effort to update brokers and sourcing systems so that landlords continue to get the best advice.
Lenders also should write to existing customers advising them that they are free to rent to housing benefit tenants. NatWest are now doing all of this and it is now time for others to follow suit.
Last week, Shelter named several lenders who have confirmed to us this restriction remains in their buy-to-let (BTL) lending policy. The lenders named are The Mortgage Lender, Pepper Money, State Bank of India and The Family Building Society after Mortgages For Business called lender call centres for confirmation.
These lenders represent a very small percentage of the BTL market but it would be nice to think that increasing the spotlight on the issue will lead to all remaining lenders to review their policies and remove the restriction.
Our industry has been fantastic in supporting homeless charities and in the last few months there has been positive lender response to the DSS discrimination campaign.
With just a bit more effort from the remaining lenders we can remove this restriction from the whole of the BTL mortgage market and make a great step towards ending the discrimination altogether.