by Mark Johnston
Lenders U-Turn on Buy to let Benefit Stance.
It seems that recent restrictions enforced by some lenders on not lending to landlords in the private sector who let to people dependant on housing benefits will mean that these people will then need to turn to their local authorities in ever increasing numbers.
Therefore we can expect more stories of families being put up in hotels and bed & breakfasts for even longer periods all at a great cost and the taxpayer will increasingly be picking up the bill for this.
There are however still some lenders out there such as Aldermore Commercial, Manchester building society, Abbey for intermediaries, Woolwich building society and Paragon/ Mortgage Trust, who will lend to those landlords willing to let out their properties to those on housing benefits.
This said it now appears that The Mortgage Works has U-turned on its decision to stop lending to landlords who have tenants on housing benefits.
The lender has removed exclusions from lending criteria which meant that they would not lend to landlords who accept tenants on benefits.
Nationwide divisional director of mortgages, Richard Napier, said “the buy to let sector is very important to us. We have listened to concerns that have been expressed by some of our customers and believe this is the right way forward for the Mortgage Works, for landlords and for their landlords”.
The UK’s biggest buy to let lender, by lending volumes, BM Solutions, the Lloyds Banking Group buy to let lending subsidiary, has also dropped its restrictions on lending to landlords with tenants who are on housing benefits.
A BM Solutions spokeswoman, says “recognising the increasingly important role buy to let has in meeting housing demands, we have reviewed our current policy relating to tenants receiving housing benefits and its impact on our lending decision”.
Therefore the lender confirms that the condition to not lend to these landlords will not be enforced on either new or existing mortgages.
This news came less than two weeks after its biggest competitor in the buy to let market, Nationwide building society, decided to make a U-turn on its lending to this type of landlords.
Coventry building society it seems is also reviewing its buy to let lending criteria after two of its rivals softened their stance on lending to landlords with tenants on housing benefits.
A spokesperson for the building society confirmed that this particular element of its criteria is currently ‘under review’.
Some experts suggest that it appears that many of these lenders were not aware of the number of people on benefits and therefore they did not realise the amount of business they could potentially loose.
Other buy to let mortgage lenders such as Skipton building society and Natwest Intermediary Solutions have said that they have no immediate plans to amend their criteria. The Yorkshire building society could not confirm whether it planned to review their lending criteria.
The Buy to Let managing director, Ying Tan, adds “it is a herd mentally. If the big boys get comfortable with lending to landlords with tenants on benefits the rest start to follow”.
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