View more on these topics

Santander to review controversial buy-to-let clause

Santander-700x450.jpg

Santander will review a clause in its buy-to-let contracts after the lender came under fire for asking landlords to increase rents by “as much as can be reasonably achieved” whenever possible.

Money Marketing sister title Mortgage Strategy was contacted by a private landlord who had spotted the clause in her mortgage contract and was concerned about the effect this would have on tenants.

Other industry figures strongly criticised the lender’s inclusion of the clause.

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 landlord’s contract states:

“a) …a reasonable time before any opportunity arises for a review of the rent payable under the lease, you will get written advice from a qualified valuer who is a member of the Rics whether the market rent at the date of the review is likely to be higher than the rent currently payable under the lease;
b) You will provide us with a copy of the valuer’s advice;
c) 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;

d) You will notify us promptly of the result of the review.”

But a Santander spokeswoman says the lender will review its buy-to-let contract following the furore.

She says: “We recommend that landlords should set their rents at a prudent level that is fair for the tenant and based on market rates, ensuring that they are able to continue to service their mortgage.

“The clause in question has formed part of our mortgage terms and conditions since we re-entered the buy-to-let market in 2011. It forms part of our terms and conditions because it is important to us that our customers can continue to afford their loan repayments. 

“It is in no-one’s interest for a landlord to default on a loan (including the tenant).

“We recognise that it is for the landlord to set a rent that both they and the tenant agree upon. As with all our products, the mortgage terms and condition remain under constant review and we will review this particular clause now that we are aware that it can be misunderstood.”

Recommended

Santander-700x450.jpg
2

Santander under fire for pushing landlords to hike rents

Santander has come under fire for a clause in some of its buy-to-let mortgage contracts that asks the landlord to increase rents by “as much as can be reasonably achieved” whenever possible. Money Marketing sister publication Mortgage Strategy was contacted by a private landlord who had spotted the clause in her mortgage contract and was […]

5

Re-engineering buy-to-let: How lenders are shifting from a shrinking market

The buy-to-let sector is undergoing a transformation as specialist lenders and brokers are increasingly moving away from a shrinking market and into residential mortgages. The Council of Mortgage Lenders believes the size of the buy-to-let market will fall this year and next from the £40bn level seen in 2015 and 2016. Some commentators believe the […]

BoE-Bank-of-England-700x450.jpg

Bank of England questions lenders over buy-to-let loans

Bank of England officials have raised concerns about buy-to-let lending with major UK banks, which lenders have interpreted as a sign to rein in landlord loans. The Financial Times reports supervisors from the Prudential Regulation Authority have visited at least three major lenders in the last two weeks. One source told the newspaper: “The message […]

Guide

Guide: what you need to consider for your auto-enrolment project

In this guide, Johnson Fleming reveals what items you need to understand to gauge the impact of auto-enrolment on your business. The guide focuses on: the impact that your auto-enrolment scheme will have on you; assessing your workforce; understanding your staging date; reviewing your current provision; and modelling contribution levels and costs.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com