Mortgage Lenders Discriminating Against Benefit Claim Tenants

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New research has shown that mortgage lenders are discriminating against benefit claim tenants by refusing buy to let investors loans where the tenant is on benefit claims.

Research by the Residential Landlords Association (RLA) found that 66 per cent of lenders refused a loan where the tenant was on benefit. Even more worryingly, these lenders represented 90 per cent of the buy to let market.

The research was carried out following news that a landlord had her mortgage revoked by NatWest because she was renting to a benefit claimant.

NatWest told Helen McAleer, who lets out a home in Northern Ireland, that she would either have to evict her tenant of two years, or take her mortgage business elsewhere, after a blanket ban by the bank on benefit claimants.

The bank’s buy to let eligibility criteria states: ‘We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or ‘Related Person’ tenancies.’

Ms McAleer refused to evict her tenant, who always paid the rent on time for more than two years, and instead moved her loan to another provider.

The landlord has since launched a petition calling for an end to such discrimination.

Supporting the action, the RLA has sent a letter to the Treasury Minister responsible for banking, John Glen MP, calling for the government to use the influence it has in those banks in which it currently has shares to end such discriminatory practices.

It also called on the Financial Conduct Authority (FCA), working with the Bank of England, to undertake a full investigation into the extent of this problem and prepare plans to end it.

The RLA believes such practices breach a number of principles within the FCA’s ‘Treating Customers Fairly’ agenda.

Policy director for the RLA, David Smith, commented: ‘With growing numbers of benefit claimants now relying on the private rented sector, it is shameful that many lenders are preventing landlords renting property to some of the most vulnerable in society with little or no justification.’

He continued: ‘The Banks have had long enough to get their house in order. It is now time to take firm action to stop such unjust practices.’

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