Two of the biggest lenders on the high street have done an about turn and decided that landlords with tenants on benefits are an acceptable risk. Nationwide went first and lifted its restrictions on benefits tenants, shortly followed by the Lloyds banking group. So if you are looking to expand your property portfolio into the social housing market, Nationwide and Lloyds will welcome you with open arms. Well, not quite, but at least they won’t slam the door in your face.
Are social tenants a high-risk tenant?
Unless you have been living under a rock, you can’t fail to be aware of the cold winds of change heralding strict new welfare reforms. In the bad old days, benefits tenants could enjoy a cushy life living on the state with rent payments going straight to the landlord. But in an attempt to reduce the welfare budget, the coalition government is switching to a new Universal Credit where all benefits are lumped into the same payment. In theory it is supposed to encourage claimants to manage their money better, but in practice critics are concerned that rent arrears and debt will spiral.
Bedroom tax
And let’s not forget the controversial bedroom tax. Tenants with a spare room will soon have their housing benefit portion cut to reflect any over occupancy they have. This could amount to a fairly hefty reduction in money for some people, so landlords should be prepared for the possibility that their tenants will struggle to pay the rent.
