The Government is aware of buy-to-let lenders that stipulate no housing benefit tenants, but will not intervene.
This was made clear in a Parliamentary answer by Communities minister Andrew Stunell to Green MP Caroline Lucas.
She asked for a statement about buy-to-let lenders who prohibit tenancies with housing benefit claimants in their lending terms and conditions.
Stunell replied: “We do not collect data on the number or proportion of buy-to-let mortgage lenders whose terms and conditions prohibit the letting of a property to a housing benefit claimant.
“Buy-to-let has provided choice and affordable accommodation in the private rented sector, and makes an important contribution to meeting people’s housing needs. Many new landlords have entered the market over recent years using buy to let mortgages, which now account for around 10% of all new gross mortgage lending.”
Pressing the question further, Lucas asked if Stunell would hold discussions with lenders to urge them to remove any restrictions.
He replied: “While we are aware that some buy-to-let mortgage lenders prohibit the letting of properties to housing benefit claimants and restrict the lengths of tenancies, these are commercial decisions with which the Government would not seek to intervene.
“We believe that the private rented sector is doing a good job in housing people on benefits, and currently estimate that around 30% of households in the sector are in receipt of housing benefit. We are working to ensure that the private rented sector continues to thrive and to offer affordability and choice to those seeking a home.”
The issue about housing benefit tenants in the private rented sector who receive Local Housing Allowance is a politically thorny one.
Currently, it is the tenants who receive the LHA direct and are trusted to hand this over to their landlords. Landlords claim this doesn’t always happen, and lenders are concerned that landlords who are reliant on rent to pay their mortgages may be left in difficulties.
The Council of Mortgage Lenders is backing a campaign, which also has the support of homelessness charities, to allow tenants the right to choose whether it is they, or their landlords, who receive the LHA.