Communities and Local Government CommitteeSupplementary written evidence submitted by the Council of Mortgage Lenders

A note on the proportion of lenders who prohibit letting to housing benefit claimants:

We have sought information from across our membership. For information, a high proportion of outstanding balances in the BTL market are concentrated on a relatively small number of firms.

As such, we can report on those lenders that prohibit or allow letting to HB claimants in terms of aggregate market share of outstanding balances. Members representing around 80% of the BTL market by outstanding balance responded and of those:

Lenders representing around 55% of the market allow BTL customers letting to HB claimants.

Lenders representing around 25% of the market restrict BTL customers letting to HB claimants.

We have asked members to ensure that BTL mortgage terms and conditions are fit for purpose, although it is for individual lenders to determine this. Some key factors for lenders to consider include:

their particular specialisms and appetites in the BTL market;

likelihood for the mortgage to fall into arrears; and

the difficulty that some inexperienced or smaller scale landlords may face in managing the tenant and guaranteeing the rental stream.

Whether there is better evidence on the proportion of buy-to-let landlords who have the wrong kind of mortgage.

The CML does not hold any data on residential mortgagors renting out their properties without the lender’s prior consent. Lenders will generally be sympathetic to a residential mortgagor’s request to temporarily let their property.

May 2013

Prepared 16th July 2013