The lender told Mortgage Solutions that the change will come into effect immediately as it would not be enforcing the condition to exclude tenants on benefits on its contracts.
However, it is likely to take some time to complete the implementation of updating systems, processes and documentation, it added.
McAleer launched a campaign, supported by Mortgage Solutions, to have the industry remove such restrictions after she was told by NatWest she would have to evict her vulnerable tenant or face remortgaging and paying £2,500 in early repayment charges.
Metro announced the move after participating in a government-hosted roundtable in Downing Street to discuss the importance of the situation.
Andy Piggott, director of lending products at Metro Bank, said: “Over recent months we have been working closely with a number of industry stakeholders including the Ministry of Housing, Communities and Local Government, housing charity Shelter and our clients to better understand the challenges facing landlords and their tenants.
“Following an extensive review, we can confirm that we will be changing our buy-to-let lending policy to enable landlords with buy-to-let mortgages to let to people claiming benefits.”
End the discrimination
Housing minister Heather Wheeler met with industry bodies and companies at the event and emphasised that the government believes the term has no place in a modern housing market.
She also reiterated the government’s plan to introduce a blanket ban on it.
Wheeler said: “Regardless of financial circumstances, everyone should have the same opportunity when looking for a home and I have been determined to end the discrimination those on benefits face.
“Today’s meeting was yet another step forward; marking an important shift in making the private rented sector fairer for all – and I am thrilled that Metro Bank has decided to join us in ending the stigma surrounding tenants on housing benefit.
“I am grateful to those companies for taking the time to discuss this issue, and look forward to us continuing to work together,” she added.