Last Wednesday we discussed how the future of the buy-to-let lending sector was changing, especially due to the fact that Nationwide – one of the biggest lenders for buy-to-let landlords – had officially stated that they would no longer be offering their services to landlords with tenants that receive housing benefits. It was believed that the building society made the decision in order to protect themselves against the upcoming welfare reforms, which many believe will cause tenants who receive housing benefits to fall into rental arrears. Unless landlords are protected by a landlord insurance policy with rent guarantee insurance, failure to pay rent by tenants could lead to landlords defaulting on their mortgage repayments.
However, due to public criticism over their decision, Nationwide has declared that they are to reverse their decision, and that their buy-to-let lending subsidiary The Mortgage Works will continue to do business with landlords who have tenants that receive housing benefits. Discussing this new decision, the group’s mortgage director, Richard Napier said: “The clarification of our terms and conditions, which took place last December, brought The Mortgage Works into line with several other Buy-to-Let lenders. This will now be removed.”
“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 last few days, and believe this is the right way forward for The Mortgage Works, for landlords and for their tenants.” This new decision has been praised by many members of the private rented sector, including Richard Lambert, chief executive officer for the National Landlords Association (NLA), who said: “There is a great deal of demand from tenants in receipt of housing allowance and if the private-rented sector doesn’t help to support housing provision, many tenants will be left homeless.”
Even though there are other lenders which still offer mortgages to landlords with tenants that receive housing benefits, such as Manchester Building Society, Keystone, Paragon and The Mortgage Trust, The Mortgage Works currently dominates the market with a share of around twenty per cent. However, the amount of landlords who are happy to let properties to those who receive housing benefits has also decreased due to the upcoming welfare reforms, and last year there was a six per cent drop between quarter three and quarter four.