New research from the Residential Landlords Association (RLA) finds that around two-thirds of buy-to-let lenders are discriminating against those tenants who are receiving Housing Benefit.
The research commissioned by the RLA found that of 58 different lenders for a buy-to-let mortgage on a two-bedroom property, 38 of them would not permit the properties to be rented out to tenants claiming Housing Benefit.
Of ten of the banks that would allow their properties to be let to those on Housing Benefit, one said that they would not allow renting to ‘vulnerable’ tenants. Nine others had said that they were ‘prepared to consider’ Housing Benefit claimants, whilst another said it does not have a criteria for claimants.
Reasons given by lenders for not lending to those renting to claimants included concerns about rent not being paid based on historic data they held on the risk of tenants falling into arrears or facing repossession.
The RLA is calling for the future government to undertake an urgent review of buy-to-let mortgage lending practice following this revelation that 90 per cent of the buy-to-let lending market is discriminating against Housing Benefit claimants.
Chairman Alan Ward said:
“Discrimination against tenants receiving benefits is not driven by landlords but by the banking system. If the private rented sector is to house more people, then barriers to landlords making fair decisions over who they rent to must be removed.”
Mr Ward is proposing an alternative system where tenants on Universal Credit and benefit payments can opt to have their payments made directly to their landlords if they wish it.
“We need a system which gives tenants, landlords and lenders the confidence they need that rent will be paid on time and in full,” said Mr Ward.
Banks are discriminating against Housing Benefit tenants https://t.co/gGnQVmgBcu
— LandlordZONE (@LandlordZONE) May 9, 2017