NatWest has announced that is scrapping the six month maximum assured shorthold tenancy (AST) letting rules and also its outright ban on letting to tenants claiming benefits.
The lender has confirmed, following pressure from the Residential Landlords’ Association (RLA), it is to extend the maximum letting period of an AST from 12 months to 36 months, and it will remove the its ban on housing benefit claiming tenants.
The changes will affect new and existing landlords with fewer than ten properties and brings its policy in-line with the bank’s other policies for commercial buy-to-let customers.
The bank has told the RLA that it made the decision after conducting an extensive review of its buy-to-let policies, in a bid to “better understand the market and challenges that landlords and their tenants face”.
According to figures produced by the RLA, two out of three the big buy-to-let mortgage lenders won’t allow landlords to rent property to tenants receiving housing benefit.
Ever since the media took up the story the RLA has been lobbying government to review the situation, urging the treasury to take appropriate action.
NatWest is one of the first big mortgage lenders to work with a landlord association and the homelessness charity Shelter to address the issue of AST lettings and mortgage approvals.
Given the government’s policy of encouraging landlords to offer longer-term tenancy, mortgage restrictions were a real stumbling block to this.
It is now thought likely that other main mortgage lingers will fall into line with the NatWest’s new policy.
RLA policy manager John Stewart said:
“We warmly welcome the announcement from NatWest.
“Around 20 per cent of all private sector tenants are in receipt of benefits and we need to do all we can to support them to find the homes they need.
“NatWest’s decision will make it easier for landlords to rent to benefit claimants and agree long term tenancies where suitable. We urge other lenders to follow this lead.”
Managing Director of Home Buying & Ownership at NatWest, Ian McLaughlin said:
“I am pleased that we are introducing these changes and extending our policy to support smaller landlords in this segment of the market.
“We would like to thank Shelter and the Residential Landlord’s Association for their thoughtful and thorough contributions to the review, to help us better understand the market in this area and bring our policies in line with those in our commercial segment.”