Housing Benefit Tenants Discriminated Against by Buy to Let Lenders

Two thirds of the largest buy to let lenders have been accused of discrimination against tenants receiving housing benefit, according to new research from the Residential Landlords Association (RLA).

The RLA has called for the next government to undertake an urgent review of the practice following the revelation that banks representing approximately 90 per cent of the buy to let market discriminate against housing benefit claimants.

The analysis commissioned by the RLA assessed the policies of 58 different lenders for a buy to let mortgage on a two-bedroom flat where the prospective tenants would be benefit claimants. 38 of those said that they would not permit properties to be rented out to those on housing benefits. Ten of the banks allowed properties to be let to those on housing benefits, although one said that they would not let to ‘vulnerable’ tenants. Nine asserted that they were prepared to ‘consider’ housing benefit claimants whilst one said it does not have a criteria for claimants.

Chairman Alan Ward said: ‘Discrimination against tenants receiving benefits is not driven by landlords but by the banking system. If the private rented sector is to house more people, then barriers to landlords making fair decisions over who they rent to must be removed.’

He proposed an alternative system within which a tenants Universal Credit and benefit payments could be made directly to their landlords should a tenant wish for this. He said: ‘We need a system which gives tenants, landlords and lenders the confidence they need that rent will be paid on time and in full.’

Doug Hall, director of the mortgage distributor 3mc, which carried out the research, commented: ‘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.’