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Mortgage lender exits LHA market: NLA warns this could lead to shortage of affordable housing
Mortgage provider Nationwide, which provides buy-to-let mortgages for 34 per cent of the buy-to-let market*, withdrew from lending to new landlord customers with Local Housing Authority tenants yesterday.
The National Landlords Association (NLA) is warning of the dangers this could have on the Local Housing Allowance (LHA) market.
With many local authorities struggling to meet the need for affordable housing, private-residential landlords often help to meet the need and let to LHA recipients. However, with some mortgage companies refusing to lend to landlords with LHA tenants, letting to this market can be difficult; it is only really an option if the landlord owns the property outright.
In addition, whilst tenants may be in work and pass appropriate tenant checks when a tenancy commences, circumstances change and in the current jobs market, a tenant could find themselves out of work and claiming LHA benefits mid-tenancy. In such a situation the landlord would find themselves breaking the terms of the mortgage through no fault of their own.
Richard Lambert, Chief Executive Officer of the NLA, says:
“There is a great deal of demand from tenants in receipt of housing allowance and if the private-rented sector doesn’t help to support housing provision, many tenants will be left homeless. With this in mind, it is essential that mortgage providers look to lend to landlords of all tenants, irrespective of where they derive their income.
“Moves such as this will obstruct landlords from investing in much needed affordable housing. Our latest Landlords’ Panel shows that the incidence of landlords letting to LHA claimants has fallen six per cent from quarter three to 28 per cent in quarter four 2012.
“There is widespread concern amongst landlords over the introduction of Universal Credit and this will only add to it. However, the government’s latest announcement that there will be an alternative to direct payments, the Alternative Payment Arrangement, should reassure landlords with vulnerable tenants that they receive regular rental payments.
“Our latest Landlords’ Panel found that 55 per cent of landlords feel that buy-to-let lenders do not consider their individual circumstances. Given the housing crisis, now more than ever, we need products that allow letting to LHA tenants to encourage greater investment in the sector.”
*According to the NLA’s Quarter 4 Landlords’ Panel
For further information, please contact:
PR Executive, NLA
0207 820 7903
NOTES TO EDITORS:
The National Landlords Association (NLA) is the UK’s leading organisation for private-residential landlords. It has over 20,000 paid members, ranging from full-time landlords with large property portfolios to those with just a single letting. NLA membership helps landlords make a success of their lettings business by providing a wide range of information, advice and services. The NLA campaigns for the legitimate interests of landlords by seeking to influence decision-makers at all levels of government and by making landlords’ collective voice heard in the media. It seeks to raise standards in the private-rented sector while aiming to ensure that landlords are aware of their statutory rights and responsibilities. Based at its head office in Central London, the NLA currently employs over 40 full-time staff and has a network of more than 40 regional representatives and branches throughout the UK.