Britain's biggest building society has been forced into a uturn over plans to restrict mortgages to landlords who accept housing benefit.
Nationwide's The Mortgage Works subsidiary had changed its terms and conditions to exclude lenders who wanted to offer properties to tenants on benefits and Local Authority tenants.
However, Richard Napier, the group’s mortgage director, said that the group had changed its mind, following concerns raised by customers.
“The clarification of the terms and conditions, which took place last December, brought The Mortgage Works into line with several other Buy-to-Let lenders,” he said. “This will now be removed.”
“The Buy-to-Let sector is very important to us,” he said. “We have listened to concerns that have been expressed by some of our customers, over the last few days, and believe this is the right way forward for The Mortgage Works, for landlords and for their tenants.”
The decision followed warnings that vulnerable tenants could be left homeless by the decision. The Mortgage Works is the biggest lender to landlords who provide housing to those in receipt of housing allowance. It had lent to these landlords on a case-by-case basis before changing its terms and conditions back in December.
"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" warned Richard Lambert, chief executive officer of the National Landlords Association (NLA).
Experts said that Nationwide’s earlier decision was down to the changes in the benefits system. As well as a cap on total benefits, the new system will not see benefits paid directly to the landlord, except in exceptional cases. The housing element of benefit will be cut first if people’s benefits exceed the new cap, which comes in in April.
The NLA said that its latest research showed that landlords were already being put off letting to those receiving benefit, with a 6pc drop in the incidence of landlords letting to these claimants between quarter three of last year and quarter four.
The Mortgage Works has around 20pc of the buy-to-let market, but it is the biggest lender in this particular buy-to-let area. There are around 3.8 million households in private rented accommodation, 26pc of which – 982,000 – receive housing benefits, according to government figures.