Two-thirds of BTL lenders say NO to benefit tenants

Despite the rising requirement for properties, more and more landlords are being discouraged from renting to tenants in rescript of housing benefits, following strict regulations imposed by buy-to-let lenders.

Recent research, carried out by mortgage distributor 3mc has revealed that around two-thirds of buy-to-let lenders, which represented a huge 90% of the market share, prohibit landlords from letting property to tenants who receive housing benefits.

The research explored the fine print attached to 58 mortgage policies. The policy was in place to pay for the purchase a two-bedroom flat, where the proposed tenants would be in receipt of housing benefit. The results revealed that 38 of the lenders would not permit the mortgaged home to the rented to the prospective tenants.

Ten of the lenders would allow properties to be let to those receiving benefits, however one stipulated that they cannot be let to ‘vulnerable tenants’.

Nine were willing to ‘consider’ benefit claimants, and one said that there was no stipulation at all for people receiving benefits.

Some of the reasons given for not lending to those renting to claimants include concerns about rent not being paid and historic data which calculates the risk of tenants falling into arrears or facing repossession.

Doug Hall, director of 3mc

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