As many of our buy to let and landlords building insurance policy holding customers know, being able to fill one’s accommodation is of the utmost importance. Along with careful planning and research, such as looking at buying a property near a university for example, most landlords are keen to be able to offer their flats or houses to as many people as possible.
And yet landlords can have some restrictions placed on this access to renters, most notably in the exclusion of housing benefit tenants by the mortgage lenders themselves. A number of lenders, such as Accord (owned by Yorkshire Bank) and BM Solutions (owned by Lloyds TSB) stipulate in their underwriting criteria that those on Department of Work and Pensions benefits cannot take up residence in accommodation financed by their buy to let mortgages.
The common thinking behind this rule is that maintenance and repairs are not kept up with in the same way as would happen if the tenant was employed. Rent is also paid in arrears, as opposed to in advance. While these and other reasons are commonly held among lenders, David Lawrenson, a rental sector expert who wrote for the Guardian Housing Network blog recently, saw “no statistical evidence to suggest that landlords who let to tenants claiming benefits are any more likely to default on their mortgages than landlords who avoid such tenants.”
As pressure grows on local authorities to find housing for increasing numbers of people, these kind of rules may be seen by some to hinder the process of providing housing to those in need, and of ensuring landlords can fill their properties.