The Committee is today publishing correspondence with Ross
McEwan, CEO of NatWest, on concerns about restrictions on
mortgage lending to landlords whose tenants are in receipt of
housing benefit and Universal Credit.
The bank came under fire in October over the case of a landlord
refused a re-mortgage - and in fact threatened with
revocation of the existing mortgage on the property - because she
was renting the property to a tenant in receipt of housing
benefit. The landlord, Helena McAleer, was told that she
would either have to evict her tenant, a vulnerable elderly
lady, or pay the early repayment charges and forego the
mortgage as it was the bank’s policy not to allow rentals
to a ‘DSS claimant’.
There a 4.2 million people in receipt of housing benefit in the
UK. Research by the Residential Landlords Association found that
66% of lenders, covering 90% of the buy-to-let market, have this
kind of prohibition on lending. The Committee is deeply concerned
about the extent to which mortgage providers are therefore
preventing landlords from renting to benefit claimants,
especially given the desperate shortage of affordable
housing and the large numbers of claimants now dependant on
the private rented sector.
Natwest CEO Ross McEwan responded expressing the bank’s “extreme
disappointment” with the way the case was handled, claiming it
“did not reflect the values of [the] organisation” and promising
an immediate review its lending practices. However, the letter
also states that “in line with a number of other lenders …our
mortgage policy for landlords with smaller property
portfolios…includes a restriction on letting to tenants in
receipt of housing benefit. This reflects evidence that rental
arrears are much greater in this segment of the market and we are
satisfied that this restriction does not contravene equality
legislation.” Natwest is reviewing its policy and has agreed to
inform the Committee of the outcome.
The Committee has been inquiring into the impact of Universal
Credit since January 2017, when it first began to learn of the
problems of rent arrears and destitution associated with rollout
of the controversial new benefit. More recently these concerns
have been echoed in its inquiry into the Benefit Cap.
Chair of the Work and Pensions Committee Rt Hon MP said: “The Government claims
its welfare reforms are intended to drive employment, but
allowing banks to operate a “no DSS” policy is a return to the
wicked old days of housing discrimination, with claimants
effectively blacklisted for housing and at risk of being
senselessly evicted for no greater crime than receiving housing
benefit. NatWest is now taking a look at its policy, and other
mortgage lenders will no doubt follow suit. If the change we need
to protect people is not forthcoming voluntarily, we may need to
look to regulation.”
