Some private landlords with buy-to-let mortgages are being prevented by their lenders from letting to people on benefits.
BM Solutions, the buy-to-let brand of state-backed Lloyds Banking Group, is one lender, and Accord, a Yorkshire Building Society brand, is another.
Buy-to-let consultant David Lawrenson said he found it ‘incredible’.
Lawrenson said: “It seems interesting that the Government, who have an interest in getting vulnerably housed people housed in the private rented sector, have not picked up on this issue before, especially as one lender is a part state-owned bank.
“The most interesting thing about this is that from all the work we have done in this area, we have seen no statistical evidence to suggest that landlords who let to tenants on benefits are any more likely to default on their mortgages than landlords who avoid such tenants.”
Chris Maggs, Accord’s national account manager for buy-to-let, said: “We do not currently lend to DWP assisted tenants or tenants in receipt of housing benefit.
“We are a relatively new entrant into the buy-to-let market, and as a responsible lender have taken a cautious approach, with a focus on financially sound borrowers who already have some buy-to-let experience.
“Our range of mortgages and lending policy is continually evolving and we would not rule out changes in the future to satisfy requirements of the private rental sector, provided applicants meet our fundamental requirements of being experienced buy-to-let borrowers with a good financial track record.”
A spokeswoman for BM Solutions, said: “Through our buy-to-let criteria, we are actively managing the risk profile of this type of lending.
“Historically, this type of tenant has been of a higher risk, and this is reflected in our criteria. We are currently reviewing this aspect of our lending criteria, and will communicate the outcome of this review when appropriate.”
What Lawrenson says:
https://tinyurl.com/bsyuxqt
Comments
Wait until you get a tenant on benefits who has the backing of the council- trying to serve a S21 is like prizing a limpit from your testicles after a bracing swim in the channel. Councils encourage to tennant to wait until they see the whites of the balifs eyes and only then will they move. They are ( not all, but some) a sub class, content to collect hand outs, because that is what thier single parent upbringing has encouraged. We have only ourselves to blame. The insurance companies are no fools!- The councils will only take on decent benefit claimants, leaving the derge for the private landlord. Keep your eyes open, the recession & Camerons cuts iare getting them angry- they are being forced to work and cancel their sky payments...its a receipe for a riot!
It's worth pointing out that the majority of Buy to Let Landlords Insurance providers where rent guarantee cover is taken, exclude benefit claiments, unless benefit is a top up to employed income, Lenders require insurance to be in place and must be an approved Landlords Policy, so even if lender does not exclude benefit claiments, the insurer may.