NatWest scraps 6-month letting mortgage rule

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Buy-to-Let Mortgages:

NatWest has announced that is scrapping the six month
maximum assured shorthold tenancy (AST) letting rules and also its outright ban
on letting to tenants claiming benefits.

The lender has confirmed, following pressure from the Residential
Landlords’ Association (RLA), it is to extend the maximum letting period of an AST
from 12 months to 36 months, and it will remove the its ban on housing benefit
claiming tenants.

The changes will affect new and existing landlords with
fewer than ten properties and brings its policy in-line with the bank’s other policies
for commercial buy-to-let customers.

The bank has told the RLA that it made the decision after
conducting an extensive review of its buy-to-let policies, in a bid to “better
understand the market and challenges that landlords and their tenants face�.

According to figures produced by the RLA, two out of three the
big buy-to-let mortgage lenders won’t allow landlords to rent property to
tenants receiving housing benefit.

Ever since the media took up the story the RLA has been
lobbying government to review the situation, urging the treasury to take appropriate
action.

NatWest is one of the first big mortgage lenders to work
with a landlord association and the homelessness charity Shelter to address the
issue of AST lettings and mortgage approvals.

Given the government’s policy of encouraging landlords to
offer longer-term tenancy, mortgage restrictions were a real stumbling block to
this.

It is now thought likely that other main mortgage lingers
will fall into line with the NatWest’s new policy.

RLA policy manager John Stewart said:

“We warmly welcome the announcement from NatWest.

“Around 20 per cent of all private sector tenants are in
receipt of benefits and we need to do all we can to support them to find the
homes they need.

“NatWest’s decision will make it easier for landlords to
rent to benefit claimants and agree long term tenancies where suitable. We urge
other lenders to follow this lead.�

Managing Director of Home Buying & Ownership at NatWest,
Ian McLaughlin said:

“I am pleased that we are introducing these changes and
extending our policy to support smaller landlords in this segment of the
market.

“We would like to thank Shelter and the Residential
Landlord’s Association for their thoughtful and thorough contributions to the
review, to help us better understand the market in this area and bring our
policies in line with those in our commercial segment.�

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