Santander has pledged to drop a controversial buy to let contract clause that demands any landlord to raise rents by ‘as much as can be reasonably achieved’ when possible.
Although set to remain in existing contracts, the change will apply to all new buy to let deals. The decision came after Mortgage Strategy was contacted by a private landlord concerned about the effect of the clause on tenant welfare. Although preferring to remain unnamed, the landlord had strong opinions about the use of the clause, saying: ‘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 contract clause, which has since faced widespread criticism from the industry, had suggested that landlords seek the advice of valuers to carry out regular rent reviews. It said: ‘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.’
The clause has been part of Santander’s contracts since 2011, and was allegedly introduced to ensure that investors would always meet their mortgage repayments.
A Santander spokeswoman says: ‘We have never invoked the clause and having reviewed the wording, we are in the process of removing it from our terms and conditions.’
A review of the clause is currently being carried out, however Generation Rent and Renters Rising have started petitions against the clause and have planned demonstrations at the bank’s branches. It is not known if the demonstrations will still go ahead as planned after the pledge from Santander.