Santander is dropping a controversial clause in its buy-to-let contracts that asked landlords to increase rents by “as much as can be reasonably achieved” whenever possible.
The change will apply to all Santander’s new buy-to-let contracts, though it will remain in existing contracts.
Money Marketing sister title Mortgage Strategy was contacted last month by a private landlord who had spotted the clause in their mortgage contract and was concerned about the effect this would have on tenants.
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 original contract advised landlords to appoint valuers to carry out regular rent reviews.
It adds that “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 strongly criticised by industry figures and renter groups.
Generation Rent and Renters Rising have promoted a petition against the Santander clause and have planned demonstrations at the bank’s branches this weekend.
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.”
The lender carried out a review of the clause after becoming “aware that it can be misunderstood”.
The lender said the clause was originally included to ensure its customers could always meet their mortgage repayments.
The clause has been part of the lender’s contracts since 2011.