"Don't discriminate against benefit claimants" buy to let lenders told

Urgent action is needed to tackle discrimination against benefit claimants by buy to let mortgage providers according to a leading trade body.

The Residential Landlords Association is making the call following the revelation that a landlord has had the mortgage on a property revoked because she is renting to a benefit claimant.

Helena McAleer, a landlord from Northern Ireland, contacted her bank - NatWest - after she discovered that the value of her property had increased and that there was a potential that she could release equity from the house. 

Following discussions with the bank, she was told that she would no longer be able to receive her buy to let mortgage from NatWest as it was the bank’s policy not to allow rentals to benefit claimants. 

The RLA says that the bank’s own buy to let eligibility criteria notes: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or 'Related Person' tenancies.”

Helena McAleer has since established a campaign page on Facebook in which she writes: “I was beyond disgusted by the statement. Actually more than that I cried my eyes out for hours, how could a bank, a person at a bank make the decision that I had to kick someone out of their home simply because of their circumstances, because fundamentally that’s what they are asking me to do.”

McAleer has also started a petition calling for measures to tackle such practices which clearly discriminate against benefit and Universal Credit claimants.

Research carried out by the Residential Landlords Association’s mortgage consultants, 3mc, last year found that 66 per cent of lenders representing approximately 90 per cent of the buy to let market do not allow properties to be rented out to those in receipt of housing benefit. 

This includes TSB, Virgin and the NatWest.

Now in a letter being sent to the Treasury Minister responsible for banking, John Glen, the RLA is calling for:

- the government to use the influence it has in those banks in which it currently has shares to end such discriminatory practices;

- the Financial Conduct Authority, working with the Bank of England, to undertake a full investigation into the extent of this problem and prepare plans to end it. The RLA believes such practices breach a number of principles within the FCA’s ‘Treating Customers Fairly’ agenda;

- the Equalities and Human Rights Commission to undertake a review of whether such practices breach equalities law.

David Smith, Policy Director for the RLA says: “With growing numbers of benefit claimants now relying on the private rented sector, it is shameful that many lenders are preventing landlords renting property to some of the most vulnerable in society with little or no justification. The banks have had long enough to get their house in order. It is now time to take firm action to stop such unjust practices.”