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Majority of providers now lending to DSS tenanted landlords – analysis

  • 15/05/2019
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Majority of providers now lending to DSS tenanted landlords – analysis
Most buy-to-let lenders have reviewed their policies allowing landlords to let to tenants on benefits, according to the latest research released by Mortgages for Business.


This follows a high profile campaign initiated by a Mortgage Solutions article by journalist Lana Clements involving landlord Helena McAleer, which resulted in NatWest removing all restrictions on landlords renting to tenants who are in receipt of housing benefits in March.

A survey by UK Finance found that firms with no restrictions against tenants receiving benefits now make up a collective 89 per cent of the market for new BTL lending.

Research based on information collected by brokers at Mortgages for Business, who phoned lender call centres for confirmation, although administrator confusion misled brokers and revealed differences in some cases between official lending policy and information offered to advisers.

After Mortgage Solutions completed a series of fact checks, a few lenders confirmed that this restriction has remained in their buy-to-let (BTL) lending policy. The lenders named are The Mortgage Lender (TML), Pepper Money, State Bank of India and The Family Building Society.

Jackie Bennett, director of mortgages at UK Finance, said: Most lenders do not place restrictions on landlords letting to benefit claimants, with each lender’s policy varying according to their commercial business model. Any landlord wanting to let to benefit claimants should be able to find a lender that will allow this.”



However, some lenders may have reasons behind this restriction, while others are willing to change their policy.

A spokesperson from TML said that the lender is aware of the issue and will be removing the restriction in the future.

Meanwhile, Keith Barber, director of business development at Family Building Society, said: “As we are not a specialist buy-to-let lender our published lending policy is appropriately cautious and we are well known for looking at each mortgage application individually.

“Our approach means that our experienced underwriters can and do make lending decisions which are exceptions to policy when appropriate. These exceptions include lending where the tenant is in receipt of benefits, as well as other categories such as letting to diplomatic or limited company tenants, students, family members, and houses in multiple occupation (HMOs).”

Barber said that given the payment track record described, the society would certainly have considered lending on an exception to policy basis as long as other aspects fell within the criteria, though it does not lend in Northern Ireland.

He added: “As you know, the vast majority of our lending is done via intermediaries. We make the point to them that we will listen to their clients’ story and will be happy to lend when this makes sense.

“This approach seems to be welcome and our lending volumes have been growing, though our buy-to-let (BTL) lending represents just about 0.3% of the market.”


Finance for landlords renting to tenants on benefits

David Whittaker, chief executive officer at Keystone Property Finance, said: “When Keystone launched as a full lender in its own right in September 2018 we ensured that our lending policy left the determination of who landlords generally housed in their buy-to-let property down to them as a business decision based on the location of the property and who they deemed would best serve their interests in terms of level of rent and propensity to pay.

“Our discussions with funders as we prepared to launch last year were very clear in that respect and I even went on Radio 4’s You and Yours programme in March to suggest that BTL lenders would adapt their policies to better accommodate a broader range of tenant types.

“Getting that message to market is sometimes difficult when faced with a blizzard of price incentives but I genuinely believe most lenders have followed the lead set by Paragon on this topic quite some years ago and that we all generally now serve tenant interests better but there is always room for improvement.”

Gatehouse Bank also confirmed that since the bank launched its BTL offering at the start of 2018, it has been happy to provide finance to landlords who rent to tenants on benefits.


Brokers’ view

Dominik Lipnicki, director at Your Mortgage Decisions, said: “Now it is easier to place cases but not as easy as it should be.

“The issue began when the government started to pay benefits to claimants, not straight to their landlords. I think the BTL sector has been affected negatively by government’s decisions over the past few years.

“But at some point I reckon that all lenders will change their policy.”

Jonathan Clark, mortgage partner at Chadney Bulgin, said he has rented properties to tenants on housing benefit for years, and never had any problems.

He added: “BTL lenders really should not have a problem with tenants on benefits these days.

“At the time of a new mortgage application, few landlords would even know if they were likely to rent to such occupiers and most of these would be unaware of such lender restrictions anyway.”

David Hollingworth, associate director of communications at L&C Mortgages, said there was a big enough range of lenders satisfying this type of customers.

He added: “Small lenders may still have restrictions but they are willing to review their policy soon.”


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