Nationwide’s buy-to-let lending subsidiary The Mortgage Works has U-turned on its decision to stop lending to landlords with tenants on housing benefits.
Last week, Money Marketing revealed the lender had decided to stop lending to these landlords but, within three days, TMW reversed the decision after customers raised concerns about the move.
Nationwide divisional director of mortgages Richard Napier says: “The buy-to-let sector is very important to us. We have listened to concerns that have been expressed by some of our customers over the past few days and believe this is the right way forward for The Mortgage Works, for landlords and for tenants.”
There are around 3.8 million households in private rented accommodation, with 26 per cent or 982,000 households receiving housing benefits, according to Government figures.
Other lenders that offer buy-to-let mortgages in this space include Aldermore Commercial, Manchester Building Society and Paragon Mortgages/Mortgage Trust, all of which confirmed last week they have no plans to exit the sector.
Experts suggest TMW’s original decision was in reaction to the Government’s new benefit system, universal credit, which comes into effect this year.
The new system will cap benefits at £500 a week for couples and £350 for a single person, including housing benefit, and will see fewer landlords paid housing benefits directly.
Lentune Mortgage Consultancy director Stuart Gregory says: “It is refreshing that a lender is listening to its clients. Having an extra option in an area with so few lenders has got to be a positive thing and tenants will benefit from it.”