Is it Time to put a Stop to Banks Preventing Renting to Benefit Claimants?

Benefit Claimants

Is it Time to put a Stop to Banks Preventing Renting to Benefit Claimants?

The Residential Landlords Association (RLA) has called for changes to be made to tackle discrimination against benefit claimants by buy-to-let mortgage providers.

This decision has been made, following the news that a landlord has had the mortgage on a property revoked, after finding out that they had been renting to a benefit claimant.

Although it is understandable that there are worries around tenants claiming benefits falling into rent arrears, such a decision by the lender would have a huge impact on a landlord’s livelihood.

Helena McAleer, a landlord in Northern Ireland, was informed by her bank, Natwest, that they would no longer be continuing her buy-to-let mortgage, as it was bank’s policy not to allow rentals to benefit claimants.

She found this out after contacting them, following a discovery that the value of her property had increased and that she could potentially release equity from the house.

After receiving this information, Helena McAleer decided to take action by setting up a campaign page on Facebook. On this page she has written: “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.”

Within Natwest’s buy-to-let eligibility criteria notes, it states: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or ‘Related Person’ tenancies.”

A petition has also been started by Ms McAleer, calling for steps to be taken to put a stop to practices that clearly discriminate against benefit and Universal Credit claimants.

The RLA’s mortgage consultant, 3mc, has carried out its own research into lending criteria, in relation to housing benefits. It found that last year 66% of lenders, representing approximately 90% of the buy-to-let market, do not allow properties to be rented to those in receipt of housing benefits. TSB, Virgin and Natwest are amongst these lenders.

The RLA has put together a letter to be sent to the Treasury Minister responsible for banking, John Glen MP, calling for the following:

  • The Government to use the influence it has in those banks in which it currently has shares, to end such discriminatory practices
  • The Financial Conduct Authority (FCA) to work with the Bank of England, to undertake a full investigation into the extent of this problem and prepare plans to end it. The RLA believes such practices breach a number of principles within the FCA’s ‘Treating Customers Fairly’ agenda
  • 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 rental 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.”

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