Mortgage Lending:

MPs have criticised banks for imposing restrictions on buy-to-let mortgage lending, which ultimately discriminates against tenants on benefits it is said. Some landlords and letting agents are being accused of indirect discrimination by refusing tenants on benefits.

Landlords cannot secure mortgages from most UK lends when their intention is to rent to tenants receiving welfare housing payments. Many MPs were unaware of this common ruling until it was brought to their attention by recent controversy over letting agents and landlords who refuse to let to these tenants.

The Work and Pensions Committee has said that government must address the problem amid concerns that banks are effectively blacklisting benefit tenants (no DSS) by restricting landlords who may be perfectly willing to let out their properties to tenants on welfare.

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Of all the banks that perhaps should have taken a more enlightened stance on this issue, the largely government (taxpayer) owned, NatWest Bank. It has come under fire after it came out that the bank was refusing landlords re-mortgages for properties when they are rented out to a tenants receiving housing benefits.

In a recent example, underlining the hipocrisy of the bank’s stance, one landlord was told by Nat West that she would either need to evict her vulnerable elderly lady tenant, or cancel her mortgage, pay the early release fees, and find another mortgage provider.

From a government’s spokesperson at the Department of Work and Pensions (DWP) came a statement saying that it is “deeply concerned” about the way in which mortgage lenders are restricting, and in many cases preventing, landlords from renting to benefit claimants. This is  now being particularly highlighted by the department given the “desperate shortage” of affordable housing and the plight of a large number of benefit claimants who are now wholly dependent on the private rented sector (PRS).

MP Frank Field, who is chairperson of the Work and Pensions Committee, has said:

“The government claims its welfare reforms are intended to drive employment, but allowing banks to operate a “no DSS” policy is a return to the wicked old days of housing discrimination, with claimants effectively blacklisted for housing and at risk of being senselessly evicted for no greater crime than receiving housing benefit.”

“NatWest is now taking a look at its policy, and other mortgage lenders will no doubt follow suit. If the change we need to protect people is not forthcoming voluntarily, we may need to look to regulation,” he says.

There are said to be currently 4.2 million people in the UK receiving housing benefit, and according to recent research by the Residential Landlords Association (RLA), 66% of those lenders who cover between them 90% of the buy-to-let market, impose restrictions on lending to landlords who rent to tenants claiming benefit.

Ross McEwan, chief executive at NatWest, in a written response published by the Work and Pensions Committee, has said that he was “extremely disappointed” with the way the case had been handled. He said it “did not reflect the values of [his] organisation”.

But he goes on in the same letter to say that, “In line with a number of other lenders … our mortgage policy for landlords with smaller property portfolios… includes a restriction on letting to tenants in receipt of housing benefit. This reflects evidence that rental arrears are much greater in this segment of the market and we are satisfied that this restriction does not contravene equality legislation.”

However, NatWest has said it is reviewing the policy and it has agreed to report back to the committee later this year.

Landlords and Agents advertising “No DSS” could be discriminating

1 COMMENT

  1. You know what, sadly, I am justifying the banks now, because since the system had changed from housing benefit to Universal Credit, rent arrears have increased dramatically, and there is no reason and no justification why landlords should suffer those huge losses.
    We need regulations not to allow to pay the rent direct to the tenants, from our bad experience, tenants can call UC to get the payment direct to themselves, and then they keep the money – THIS IS STEALING FROM BOTH THE GOVERNMENT AND FROM THE LANDLORDS !!! WHY IS THAT NOT A CRIMINAL OFFENCE ???
    There is another tactic, that those tenants, who we give shelter to, even though we know that many of them are ex cons, and have been homeless, and then they kick the landlords in the face , WITH THE BLESSING OF THE GOVERNMENT ! 🙁 Landlords need to be protected as well, In order for landlords to accept Housing benefit tenants, the LAW HAS TO CHANGE, IT SHOULD BE MADE CRIMINAL OFFENCE FOR TENANTS TO WITHHOLD THE RENT ! If they went to a shop and stole for £1 they can be arrested, why not be arrested when thy steal 100’s and thousands of pounds from landlords, and can stay for months without paying rent? WHY IS THAT OK? LANDLORDS ARE NOT THE CRIMINALS HERE, BUT ARE BEING TREATED AS ONES, AND BEING SLAPPED FROM ALL DIRECTIONS, BY GOVERNMENT LAWS AND LEGISLATIONS THAT TURN LANDLORDS INTO HELPLESS VICTIMS ! One of the tactics that the tenants use, (as they know ho to work the system) they can call UC, and say something is not being fixed, and UC will pay direct to them, instead of withholding the payment, until they investigate, or until the problem is fixed, or did not exist in the first place. WHY GIVE THE RENT TO THE TENANTS? THEY ARE NOT ENTITLED FOR THE RENT, THE LANDLORD IS !

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