High street bank NatWest has today announced it is scrapping restrictions preventing landlords with its buy-to-let mortgages renting homes to benefits claimants.
The lender has also confirmed it will extend the maximum length of time of assured shorthold tenancy from 12 months to 36 months, to allow landlords to offer tenants more security.
The bank said it made the decision after conducting an extensive review of its buy-to-let policies, in a bid to ‘better understand the market and challenges that landlords and their tenants face’.
According to the RLA’s most recent figures, two thirds of the largest buy-to-let mortgage lenders don’t allow landlords to rent property to tenants receiving housing benefit.
According to a survey carried out by the RLA’s mortgage consultants 3mc last year, 66 per cent of lenders – representing approximately 90 per cent of the buy-to-let market – do not allow properties to be rented out to those in receipt of housing benefit.
Since the issue hit the headlines the association has called on the government to undertake an urgent review of the situation – writing to the treasury asking it to take action accordingly.
It also supported Helena McAleer, a landlord from Northern Ireland who had her mortgage revoked when it was discovered she was renting to a benefits tenant.
It was on the back of this campaign that NatWest announced it would be reviewing its policies – with the RLA working with the bank – and homeless charity Shelter, as part of this process.
RLA policy manager John Stewart said: “We warmly welcome the announcement from NatWest.
“Around 20 per cent 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.”
In a statement NatWest said it was grateful that the association agreed to work alongside the bank.
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.”
He confirmed the bank has also decided to extend the maximum length of time of assured shorthold tenancy from 12 months to 36 months, which allows landlords to offer tenants the security of longer tenancies.
The changes will affect new and existing landlords with fewer than ten properties.
NatWest said the outcome of the review brings its policy in line with the bank’s policies for commercial buy-to-let customers.