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Landlords say lending criteria obstacle to benefit claimant rentals – RLA survey

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  • 23/08/2019
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Landlords say lending criteria obstacle to benefit claimant rentals – RLA survey
Some 36 per cent of landlords have said the conditions imposed by lenders on their buy-to-let mortgages prevented them from renting to benefit claimants, suggesting a “structural barrier” against such tenants.

 

This comes despite research out in May this year suggesting most lenders had reviewed and changed their lending policies on accepting DSS tenants, including NatWest, after a high-profile campaign, covered in Mortgage Solutions, spearheaded by landlord Helena McAleer and supported by Mortgages for Business last year.

TML was the last lender to confirm the changes in July, suggesting over 90 per cent of lenders are open to benefit claimants.

However, according to the Residential Landlords Association’s (RLA) survey of 2,229 private landlords, of the respondents with tenants who were currently receiving housing benefit, 62 per cent said they were worried they might not be able to afford to pay their rent when they migrated to Universal Credit. 

Some 54 per cent of landlords said tenants claiming Universal Credit had fallen behind on their rent in the last 12 months, owing an average of £2,187. A further 82 per cent said tenants began to struggle to keep up with payments after either making a new claim for or migrating to the benefit, while 68 per cent said there was a shortfall between the cost of rent and the amount paid in benefits. 

As well as this, 61 per cent said they didn’t let to those on Universal Credit due to concerns of financial risk while 51 per cent said they had perceptions of these tenants being a higher risk for rent arrears. 

A further 32 per cent of landlords said they had made an Alternative Payment Arrangement (APA) application in the past year and on average, the process took nearly eight and a half weeks for direct payment to be arranged.  

 

The PRS

 

According to the most recent statistics from the Department for Work and Pensions’ on Universal Credit, 45 per cent of households receiving this benefit with support for housing costs are in the private rented sector. 

David Smith, policy director for the RLA, said: “Today’s research shows the stark challenges the government still has in ensuring Universal Credit works for tenants and landlords. The system only provides extra support once tenants are in rent arrears. Instead, more should be done to prevent tenants falling behind with them in the first place.  

“Only then will landlords have the confidence that they need that tenants being on Universal Credit does not pose a financial risk that they are unable to shoulder. Without such changes, benefit claimants will struggle to find the homes to rent they need.” 

A spokesperson for UK Finance, added: “Over 90 per cent of lenders do not place restrictions on landlords letting to benefit claimants, so any landlord wanting to let to benefit claimants should be able to find a lender that will allow this.

“We always encourage individuals to speak to their lender if they have any concerns and research the market to find the best possible deal for their needs.”

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