Selective Licensing and Buy to Let
If you have read my recent posts and seen me quoted on the net, you will know that I recently published a blog highlighting that some lenders, (including a state owned bank), still have in place restrictions, within their buy to let mortgage terms and conditions, which prohibit private landlords letting to tenants who are on housing benefit (or “DWP” as some lenders still rather quaintly continue to refer to it as).
Last week, a landlord in Hyndburn contacted me about the fact that their lender (another state owned bank) would also not allow them to let their property any more – but this time, because it is in an area designated as a “Selective Licensing” area.
Both stances are rather silly.
In our work with other buy to let mortgage lenders, we have seen no evidence at all that the arrears experience is worse for landlords who let to tenants on housing benefit or for those who let a property in a selective licensing area.
This morning at London’s City Hall, I gave this same evidence to the London Assembly’s Housing and Regeneration Committee at City Hall.
I fully expect this story to run and run.
The surprise to us, at LettingFocus.com, is that the restrictions on housing benefit have been in place since the birth of the buy to let mortgage in 1996 and yet, in these days of homelessness, no one in government has hitherto thought fit to raise it as an issue.
Most lenders have since abandoned such pointless restrictions, but a few lenders still have them in place.
But these restrictions on selective licensing areas are a new one – and a step back.
Newham Council told us that at the end of 2011, a(nother) local authority carried out a survey of lenders asking them of their policies on buy to let mortgages and any policy they may have on lending in licensing areas. Out of the 26 lenders contacted five would not lend in selective licensing areas.
If more lenders impose restrictions on selective licensing areas, it will be very interesting for the Newham scheme, due to start in two weeks – or indeed for any other council who may introduce a similar scheme.
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