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Nationwide halts new lending to landlords with tenants on housing benefits

Experts warn move could be a reaction to the Government’s upcoming benefit reforms.


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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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Good. Once all lenders adopt this policy I won’t be propping up the buy-to-let bubble with my taxes – at least not to the same extent!

    Every little helps…….POP!

  2. It’s not that simple Anonymous (above).

    One way or other, you and many everyday people will still be propping up the ‘full-time’ clients of the Welfare State.

  3. Experts warn ‘ a reaction to the new benefits system’
    No s**t sherlock

    “Let the recipients be in control and treat it like a wage” As if….

    The sooner the goons who are setting up this crazy idea learn, the better. The rent won’t get paid in so many cases the streets will be full of the homeless. This could lead to riots.

    Anonymous 2, good response to Anonymous 1.The tax payer will end up paying MUCH more to sort this mess out.

    By all means Cap the benefit (although this should have been phased in) but pay the bloody landlord if you want to reduce homelessness and make sure that the tax payers money gets spent on what is was intended for and not booze, fags, drugs and scratch cards.

    Simple to administer at NO extra cost to the taxpayer

  4. Such warm comments anonymous1.

  5. Yeah, well, ’empowering the tenant’ is quite likely to result in the wonga being spent on the typical underclass pursuits as mentioned above (the missing one is Sky TV).

    The cunning political thing that occurred over the past ten-fifteen years was how the politicians overcome the resentment of the everyday working person whose taxes were being used to cross-subsidize the underclass.

    The political solution was to simply extend the ‘benefits’ culture right up to people earning £50-60K pa, which meant that as these folks were now sucked in to the benefits culture themselves; they could hardly complain about the underclass.

    Clever trevor stuff if you are a politician, I bet they were proud of that wheeze.

    Meanwhile, it is estimated that some 50% of pensioners do not claim the benefits to which they are entitled.

    Possibly because those old folks notion of the welfare state is totally at variance with what it now is – an unaffordable insanity light years removed from the original idea of protecting people from abject proverty.

  6. RegulatorSaurusRex 28th February 2013 at 9:24 am

    The FSA doesn’t understand mortgage risk, neither do the lenders, hence the pile of sh*t we see before us.

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