Buy to let landlords are an invaluable source of housing for tenants claiming benefits, particularly in some areas where local authority housing is in extremely short supply. Unfortunately, one of the largest lenders on the high street, Nationwide, has now withdrawn all buy to let mortgage products for landlords specialising in the Local Housing Allowance market, or in other words, landlords who let to tenants claiming benefits.
How will this affect LHA landlords?
New landlords looking for a buy to let mortgage with a view to letting their properties to benefits claimants will no longer be able to apply for a mortgage with the Nationwide. There still lenders offering buy to let mortgages for the LHA market, but the choice pf products is now a lot smaller. The only landlords who are immune are those who own their properties outright.
How will this affect the rental market?
Rental homes are already in very short supply in some areas and in many cases, the private rental landlords provide a valuable boost to the overstretched Local Authority housing stocks. With a reduction in the number of available mortgage products for aspiring landlords, there is no real incentive for them to market their properties at tenants claiming benefits, which is likely to leave some vulnerable tenants homeless.
What happens if my tenant loses his job?
If your property is mortgaged and your working tenant subsequently ends up on benefits, you must check the terms of your mortgage or you could end up in breach of the conditions of your lender.
