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Industry leaders have called for urgent action to tackle the discrimination of benefit claimants by banks due to their refusal to approve buy-to-let mortgages. Helena McAleer, a landlord in Northern Ireland, has claimed that she has had her mortgage on her rental home revoked, due to renting the property to a benefits claimant. After speaking to her bank, she was informed that the value of the property had risen, and was told that there was potential to release equity from the home. However, after more discussions with her bank, Ms McAleer was informed that her property was no longer eligible for a buy-to-let mortgage, as it is the bank’s policy to refuse mortgages on property rented to receivers of benefits.

The eligibility criteria of buy-to-let mortgages at her bank explains that they do not consider Homes of Multiple Occupancy, DSS tenants, multiple tenancies, Related Person tenancies or bedsits for buy-to-let mortgages. Following her experiences with the bank, Ms McAleer has begun a social media campaign to highlight the issue, explaining that she is disgusted with the statement from the bank. She strongly disagrees that a bank should make this decision, where landlords will have to kick tenants out of their homes, simply due to their circumstances. Ms McAleer has also launched a petition campaigning for measures to fight against such rules, which obviously discriminate against Universal Credit and benefits claimants.

Research conducted by the RLA (Residential Landlords Association) by mortgage consultants in 2017 discovered that 66 per cent of mortgage lenders, representing around 90 per cent of the BTL (buy-to-let) market, do not approve properties to be let to tenants receiving housing benefit. These included big high street banks, such as Natwest, TSB and Virgin. The RLA, in a letter to be sent to John Glen MP, the Treasury Minister for banking, has called for:

The government to apply its influence with the banks who refuse to lend buy-to-let mortgages where tenants are on housing benefit, to stop these discriminatory practices.

The Financial Conduct Authority (FCA) to work with the Bank of England in order to undertake a complete investigation into the magnitude of the problem, as well as prepare plans to overcome it. The RLA has stated it believes these practices breach many principles contained within the FCA’s policy on ‘Treating Customers Fairly’.

The Equalities and Human Rights Commission to commence a review into whether these practices are breaching law on equality. With a growing number of people claiming benefits and relying on renting within the private sector, it is a serious situation.

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