A significant number of landlords are being prevented from renting to tenants receiving housing benefit by discriminating buy-to-let lenders, fresh research shows.
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 about 90% of the market, prohibit landlords from renting property to tenants receiving benefits.
Having assessed 58 lenders’ policies for buy-to-let mortgages on a two-bedroom flat where the tenants would be claimants, 3mc found that 38 do not permit mortgaged homes to be rented out to those in receipt of housing benefit.
Doug Hall, director of 3mc, said: “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 wants to see the next government carry out a review of the practice.
The RLA’s chairman, Alan Ward, commented: “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 added.