Action to tackle the 90% of buy-to-let lenders who discriminate against benefit claimants
The Residential Landlords Association (RLA) is calling for urgent action to tackle discrimination against benefit claimants by buy-to-let mortgage providers.
Research carried out by the RLA's mortgage consultants, 3mc, last year found that 90 per cent of the buy-to-let market do not allow properties to be rented out to those in receipt of housing benefit. This includes TSB, Virgin and the NatWest.
The call comes following news that a landlord in Northern Ireland has had her mortgage revoked because she is renting to a benefit claimant.
Helena McAleer contacted her bank, NatWest, after she discovered that the value of her property had increased and that there was a potential that she could release equity from the house.
She was told that she would no longer be able to receive her buy-to-let mortgage from NatWest as it was the bank’s policy not to allow rentals to benefit claimants.
The bank’s own buy-to-let eligibility criteria notes: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or ‘Related Person’ tenancies.”
Ms McAleer has since established a campaign page on Facebook in which she writes: “I was beyond disgusted by the statement.
“Actually, more than that, I cried my eyes out for hours, how could a bank, a person at a bank make the decision that I had to kick someone out of their home simply because of their circumstances, because fundamentally that’s what they are asking me to do.”
Ms McAleer has also started a petition calling for measures to tackle such practices which clearly discriminate against benefit and Universal Credit claimants.
In a letter to the Treasury Minister responsible for banking, John Glen MP, the RLA is calling for the Government to use the influence it has in those banks in which it currently has shares to end such discriminatory practices.
It also wants the Financial Conduct Authority (FCA), working with the Bank of England, to undertake a full investigation into the extent of this problem and prepare plans to end it.
A spokesperson for the RLA said: “The RLA believes such practices breach a number of principles within the FCA’s ‘Treating Customers Fairly’ agenda.”
It is calling for the Equalities and Human Rights Commission to undertake a review of whether such practices breach equalities law.
David Smith, Policy Director for the RLA said: “With growing numbers of benefit claimants now relying on the private rented sector, it is shameful that many lenders are preventing landlords renting property to some of the most vulnerable in society with little or no justification.
“The banks have had long enough to get their house in order. It is now time to take firm action to stop such unjust practices.”
A UK Finance spokesman claimed most lenders did not place restrictions on landlords letting to benefit claimants.
“Any landlord wanting to let to tenants in receipt of benefits should be able to find a lender that will allow this,” he said.
Richard Truman, Head of Operations at Simple Landlords Insurance, added: “The government is increasingly relying on the private rented sector to help plug the social-housing gap – and that means they need to support landlords to do so.
“Renting to tenants on benefits can be valid and indeed lucrative strategy for property investors with the right properties in the right areas. And insurance is one of the things that can help to mitigate risk – for landlords and lenders.”