Santander to review controversial buy-to-let clause


Santander will review a clause in its buy-to-let contracts after the lender came under fire for asking landlords to increase rents by “as much as can be reasonably achieved” whenever possible.

Mortgage Strategy was contacted by a private landlord who had spotted the clause in her mortgage contract and was concerned about the effect this would have on tenants.

Other industry figures strongly criticised the lender’s inclusion of the clause.

The landlord, who did not want to be named, says “I, and many landlords, believe it is an outrageous clause and, if consistently enacted, would have a significant increase on rents across the country, thus further worsening the housing crisis.”

The landlord’s contract states:

“a) …a reasonable time before any opportunity arises for a review of the rent payable under the lease, you will get written advice from a qualified valuer who is a member of the Rics whether the market rent at the date of the review is likely to be higher than the rent currently payable under the lease;
b) You will provide us with a copy of the valuer’s advice;
c) If the valuer advises that the market rent at the date of the review is likely to be higher than the current rent, you will promptly take all steps which it is open to you to take under the lease to ensure that the review takes place and leads to the maximum increase in the rent which can reasonably be achieved;
d) You will notify us promptly of the result of the review.”

But a Santander spokeswoman says the lender will review its buy-to-let contract following the furore.

She says: “We recommend that landlords should set their rents at a prudent level that is fair for the tenant and based on market rates, ensuring that they are able to continue to service their mortgage.

“The clause in question has formed part of our mortgage terms and conditions since we re-entered the buy-to-let market in 2011. It forms part of our terms and conditions because it is important to us that our customers can continue to afford their loan repayments. 

“It is in no-one’s interest for a landlord to default on a loan (including the tenant).

“We recognise that it is for the landlord to set a rent that both they and the tenant agree upon. As with all our products, the mortgage terms and condition remain under constant review and we will review this particular clause now that we are aware that it can be misunderstood.”