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Nationwide halts new lending to landlords with tenants on housing benefits

The Mortgage Works, Nationwide’s buy-to-let lending subsidiary, has stopped new lending to landlords who have tenants receiving housing benefits, a move experts warn could leave many people struggling to find a place to live.


TMW, which has a BTL market share of around 20 per cent, previously lent on a case-by-case basis to landlords with tenants receiving housing benefits. It was the biggest lender offering such mortgages.

A TMW spokeswoman says: “Previously, lending to landlords with local authority tenants was not explicitly referenced in TMW’s lending criteria. Our re-issued terms and conditions make it explicit that local authority tenants are not acceptable.”

Remortgaging decisions for landlords with tenants on housing benefit using TMW should be unaffected as they will be based on rental cover rather than the nature of the tenancies, according to the spokeswoman.

There are around 3.8 million households in private rented accommodation, 26 per cent of which – 982,000 households – receive housing benefits, according to Government figures.

National Landlords Association head of policy Chris Norris says: “There is a huge market for tenants in receipt of local housing allowance and if the private-rented sector does not help to support housing provision, many tenants may be left homeless.” private rented sector consultant David Lawrenson believes the move is a reaction to the Government’s new benefits system, Universal Credits, which comes into effect in April.

It will cap benefits at £500 a week for couples and £350 for a single person, including housing benefit, and will mean fewer benefits are paid directly to the landlord.

At present, 39 per cent of housing benefit payments are made direct to landlords, according to the NLA, but the new system will only permit payment direct to landlords in specific circumstances, such as a pattern of arrears.

Lawrenson says: “Under the Universal Credits system, not only will payments be capped but there is also less chance of landlords being paid direct, making it less attractive to lend on this basis.”

Lenders still offering mortgages to landlords with tenants receiving housing benefits include Keystone, Manchester Building Society and Paragon and Mortgage Trust.

The Buy to Let Business managing director Ying Tan says: “It is disappointing because it is an area where there are few lenders willing to lend.”


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  • Don The Broker 1st March 2013 at 4:43 pm

    Erm, TMW have had this policy since December 2012 – why is MS so slow on the uptake?

  • Don The Broker 1st March 2013 at 4:43 pm

    Erm, TMW have had this policy since December 2012 – why is MS so slow on the uptake?

  • John Constable 28th February 2013 at 10:37 am

    ADD @ 4:25 pm says “Let the politicians deal with the results of their decisions.”

    Unfortunately, there are no meaningful consequences for the politicians concerned if their decisions turn out to be bad ones.

    For example, in this sector, Ed Balls and wife Yvette Cooper cooked up the idea of HIP’s, which lead to thousands of people wasting their money on training to become HIP inspectors and then the whole thing was scrapped!

    Just a tiny blot on this political couples CV as they sail blithely on at the top tier of politics.

  • ADD 27th February 2013 at 4:25 pm

    This is a risk based decision and not a politically motivated one. It is not up to lenders to make decisions based on a one sided view of social jutstice.
    Simple fact, benefits paid directly to claimants will have less chance of being paid in full to the landlord. therefore bigger risk to the mortgage. Let the politicians deal with the results of their decisions.

  • patty 27th February 2013 at 2:27 pm

    What a ridiculous stance to take on HB claimants, a professional working person who can pay full rent at the start of a tenancy could easily lose their job or become ill and have to claim HB, would affected landlords be expected to end such tenancies and what grounds could they use to get possession during any fixed term of the AST? If not required to evict these HB tenants, then why would a tenant on HB at the outset be any more risk that one whose circumstances changed and had to claim during the tenancy? It smacks of prejudice towards those who are poor and seems to be a direct result of this govt. demonising the poor, just like Hitler did during his rise to power and look at the results of that.

  • John Constable 27th February 2013 at 11:15 am

    Tim Leonard (above) is quite right to point out that moving towards professional tenants and pensioners is only viable in certain parts of the country and I should have remembered that because the area that I live in has a relatively low number of HB’s and quite a high number of pensioners/professionals.

    I suspect that ‘social housing’ landlords in other parts of the country will, in certain cases, adopt aggressive tactics to get their rent – one might call it the ‘Hoogstraten method’.

    Yes, it is the law of intended consequences for those at the bottom of the pile.

    The curse of ‘well-meaning’ politicians stikes again.

  • Tim Leonard 27th February 2013 at 10:27 am

    I totally agree with the comments above. It is the law of unintended consequences.

    Whilst in certain areas of the UK the local economics allow a move towards the professional tennant, in the majority of cases landlords are largely reliant on housing benefit. To take away the direct payment route is incredibly short sighted and will have a far reaching impact, not only on landlords but also potentially social impact on the tennants themselves. There is also the impact on the availability of sufficent properties to let on this basis further exasapated by the bedroom tax.

    May be we should expect a U turn on this policy when it all goes wrong. It wouldn’t be the first by the current government.

  • Doug Hall - 3mc 27th February 2013 at 10:18 am

    If the decision is due to the onset of the universal credit then I believe this is a complete lack of understanding by a lender of the entire transaction.
    If a property is suitable security and the applicant is acceptable to the lender then why would the type of tenant behind an AST have an impact on the decision to lend.

    In addition to the lenders detailed that do accept DWP there are a number of the new challenger banks that will also accept DWP tenants. 3mc is also talking with a number of recognised lenders at credit level with a view to looking at this market as an opportunity and not a threat.

  • John Constable 27th February 2013 at 10:00 am

    Woah, this rocks the BTL boat somewhat!

    The politicians believe in something called ’empowering the tenant’, which the reason why they want HB paid directly to the tenant, who then is supposed to hand on the rent to the landlord.

    Obviously, TMW forsee that simply ain’t going to happen in many cases and then the landlord/lender is stuffed.

    I know a few HB landlords, they are’nt stupid people and have mostly exited the HB maket some time ago and have moved on to either renting to ‘working professionals’ or … pensioners – because this cohort still gets the pension credit.


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