The Council of Mortgage Lenders has hit back at accusations that its members are a “stumbling block” to longer tenancies.
The trade body has said it is not opposed to longer tenancies and an increasing number of its members are now willing to offer mortgages to landlords who want them.
During a debate in the House of Commons on homelessness reduction yesterday (18 January), MP for Colchester Will Quince pinned the blame on lenders wanting to recover losses quickly if a mortgage holder defaulted.
But in response the CML said: “The assertion that lenders are a barrier to longer tenancies is a myth.
“While it is for individual firms to determine their lending policies, our own survey and the list of lenders published by Shelter show that there is a significant number of lenders that are prepared to advance mortgages to landlords who want to offer tenancies for two or three years – or even longer.”
Housing charity Shelter has published a “non-exhaustive” list of 13 lenders they have identified as willing to lend to landlords who want longer tenancies, including Aldermore, Barclays, Leeds Building Society and The Mortgage Works.
The CML said it has written to the MPs involved in the debate to clarify the situation.
The CML stated: “Our letter points out that, when a tenancy agreement comes to an end, the lender does not require a landlord to change their tenant.
“Many landlords simply continue to rent to the existing tenant, and there is no limit to how long this may continue.
“So, lenders’ terms do not preclude tenants from occupying a rental property for many years in practice, if both landlord and tenant are happy with the arrangement.”
The CML also pointed out that the trend for six-month or 12-month tenancies has been attributed to legislation introduced by Parliament in 1988.
Addressing the House of Commons yesterday (18 January) Mr Quince said: “I am a former property lawyer, and I know the minister also has considerable experience in this field.
“He will know that the stumbling block here is in fact the Council of Mortgage Lenders and insurers, which say that a tenancy of more than one year is not permissible in case the mortgage holder defaults and they need therefore to sell the property as quickly as possible to recover their losses.
“It is actually those two different groups that prohibit leases or assured shorthold tenancies of more than one year.”
In response communities and local government minister Marcus Jones said: “My honourable friend has considerable experience in this area and is absolutely right.
“That was one of the challenges for residential landlords, particularly buy-to-let landlords, who are restricted by the terms of a particular mortgage product they take.
“Mandating landlords to take a longer tenancy than either a mortgage lender or an insurance company may desire would cause a significant conflict and might mean that tenants are not able to secure a tenancy.”
damian.fantato@ft.com
