Buy-to-Let Lenders Prohibiting Landlords from Letting to Benefit Tenants

A significant number of landlords are being prohibited from letting their properties to benefit tenants by buy-to-let lenders, according to new research.

Buy-to-Let Lenders Prohibiting Landlords from Letting to Benefit Tenants

Buy-to-Let Lenders Prohibiting Landlords from Letting to Benefit Tenants

Analysis of the market by mortgage distributor 3mc, on behalf of the Residential Landlords Association (RLA), found that around two thirds of the largest buy-to-let lenders – representing around 90% of the market – prohibit landlords from letting their properties to tenants in receipt of benefits.

Having assessed 58 lenders’ policies for buy-to-let mortgages on a two-bedroom flat where the tenants would be benefit claimants, 3mc found that 38 do not permit mortgaged properties to be let to those in receipt of housing benefit.

The Director of 3mc, Doug Hall, says: “Some of the reasons given for not lending to those renting to claimants include concerns about rent not being paid, and historic data which calculates the risk of tenants falling into arrears or facing repossession.”

The RLA is calling on the next government to carry out a review of the practice, as well introducing a housing court specifically for landlords and tenants.

Alan Ward, the Chairman of the RLA, comments: “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.”

Ward wants to see a system where a tenant’s Universal Credit and benefit payments can be made directly to their landlord, as long as the tenant does not fall into arrears.

“We need a system which gives tenants, landlords and lenders the confidence they need that rent will be paid on time and in full,” he adds.

If you let a property to benefit tenants and are worried about them falling into rent arrears, you’ll be pleased to learn that our essential Rent Guarantee Insurance – which covers rent arrears and rent default – is available to all tenant types.

Get an instant online quote and cover here:


















©2020 Just Landlords