The work and pensions select committee says the government must address the “housing blacklist” created by lenders’ “no DSS” policies and says it will look at regulation if lenders don’t voluntarily change their lending criteria.
The work and pensions select committee has published correspondence with NatWest chief executive officer Ross McEwan about the lender’s restrictions on approving mortgages for landlords whose tenants are in receipt of housing benefit and universal credit.
NatWest came under fire last month for giving landlord Helena McAleer the choice between paying the bank’s early repayment charges and remortgaging to another lender or evicting a tenant in receipt of housing benefit.
The bank’s policy is not to allow buy-to-let landlords to let to tenants claiming benefits. Research by the Residential Landlords Association found that 66 per cent of lenders, covering 90 per cent of the buy-to-let market, have this kind of prohibition on lending.
The work and pensions select committee says it is deeply concerned about the extent to which mortgage providers are preventing landlords from renting to benefit claimants, especially given the shortage of affordable housing and the large numbers of claimants now dependent on the private rented sector.
McEwan responded expressing the bank’s “extreme disappointment” with the way the case was handled, claiming it “did not reflect the values of [the] organisation” and promising an immediate review its lending practices.
However, the letter also states that “in line with a number of other lenders …our mortgage policy for landlords with smaller property portfolios…includes a restriction on letting to tenants in receipt of housing benefit. This reflects evidence that rental arrears are much greater in this segment of the market and we are satisfied that this restriction does not contravene equality legislation.”
However, NatWest has agreed to review its policy and inform the work and pensions select committee of the outcome.
The committee has been inquiring into the impact of universal credit since January 2017, when it first began to learn of the problems of rent arrears and destitution associated with rollout of the controversial new benefit. More recently these concerns have been echoed in its inquiry into the benefit cap.
The work and pensions select committee chair Frank Field MP says: “The government claims its welfare reforms are intended to drive employment, but allowing banks to operate a ‘no DSS’ policy is a return to the wicked old days of housing discrimination, with claimants effectively blacklisted for housing and at risk of being senselessly evicted for no greater crime than receiving housing benefit.
“NatWest is now taking a look at its policy, and other mortgage lenders will no doubt follow suit. If the change we need to protect people is not forthcoming voluntarily, we may need to look to regulation.”