With people around the country generously offering their homes to help refugees, the mortgage industry wanted to ensure it did everything it could in support.
The scheme means that customers can apply to host Ukrainian refugees in their homes or in a separate property they own. Customers must host for a minimum of six months and up to a maximum of 12 months.
The refugees will not be expected to pay towards their accommodation, although the government will provide a monthly £350 “thank you” per household.
As with any rapid change, lots of work was done behind the scenes and getting the scheme established so quickly was due to collaboration across the government, our members, insurers, the Prudential Regulatory Authority and the Financial Conduct Authority. The strength and speed of member support was key – but there were some hurdles to jump before launch.
Usually, mortgage lenders have terms and conditions in place around occupancy of a property. Therefore, the scheme posed some legal and conduct risks for lenders. UK Finance worked with the Building Societies Association and members to agree for mortgage lenders to be as flexible as possible.
Refugees housed through the scheme are considered “guests”. Because they are not paying tenants, there is no tenancy agreement between the host and the refugee.
License agreements have been published, and if refugees are staying in independent or non-shared spaces, then an Excluded Occupier Tenancy Agreement can be used. It is not mandatory to sign an agreement, but hosts are encouraged to use one to clarify the terms of the stay.
Mortgage lenders vary in size, funding and operating models, so each lender’s contract looks different. Agreeing a consistent approach had its challenges but the common goal was to help during this humanitarian crisis.
Lenders agreed to be flexible about applying their terms and conditions for customers taking part in the scheme.
Terms and conditions
There are some instances where lenders may not allow customers to take part in the scheme.
For example, if someone is more than six months in arrears and repossession is underway, the borrower is vulnerable, or if there is a situation involving fraud or financial abuse. Although difficult, the decision in these situations is for the benefit of both the customer and the refugee – it’s important that homes provided to people fleeing the war are stable and safe.
Lenders will work from the starting point of enabling all customers to participate in the scheme and have up-to-date information on their websites.
It is important that customers review this information to understand any implications for their mortgage, especially if it is a buy-to-let property, shared ownership or Help to Buy.
This is an important part of the UK’s support for Ukraine and shows the generosity and kindness of households across the UK. A lot of work went on behind the scenes and the team at UK Finance were really pleased to have been able to play a part in helping deliver this support.
