NatWest has bowed to growing industry pressure by lifting restrictions on buy-to-let landlords renting to tenants in receipt of housing benefit.
In October, NatWest's lending practices came under attack after the bank told one landlord that she would either have to evict her tenant of two years or take her mortgage business elsewhere, after a blanket ban by the bank on benefit claimants.
The bank’s own buy-to-let eligibility criteria noted: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or 'Related Person' tenancies.”
The landlord, Helena McAleer, who let out a home in Northern Ireland, refused to evict her tenant, a vulnerable older woman who always paid the £400-a-month rent on time for more than two years, after being denied a remortgage by NatWest and instead moved her loan to another provider. She launched a petition that has attracted more than 5,200 signatures supporting an end to such discrimination.
The Residential Landlords Association (RLA) has since raised serious concerns that the majority of buy-to-let lenders are preventing landlords renting property to some of the ‘most vulnerable in society’.
The RLA has been lobbying the government to tackle discrimination against benefit claimants by mortgage providers after research late last year by the landlords association found two-thirds - 66% - of lenders representing 90% of the buy-to-let market refuse a loan where a tenant is on housing benefit.
The Work and Pensions Committee has now written to a number of mortgage lenders about potential DSS discrimination clauses in their lending policies.
Ian McLaughlin, managing director of Home Buying & Ownership at NatWest, 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.”
Natwest has also extended the maximum length of time of assured shorthold tenancy from 12 to 36 months, which allows landlords to offer tenants the security of longer tenancies.
John Stewart, policy manager for the RLA, commented: “We warmly welcome today’s announcement from NatWest.
“Around 20% 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.”