Lenders Hold a 'Moral Responsibility' to Safeguard Tenants' Housing
In a poignant plea, Ben Twomey, CEO of Generation Rent, has emphasised the moral obligation of lending institutions to safeguard the housing rights of tenants, especially as a growing number of landlords face property repossessions due to financial arrears.
Twomey has penned an open letter addressed to the chief executives of four prominent lending institutions, urging them to refrain from evicting tenants residing in properties owned by landlords who have defaulted on their mortgage payments.
Anticipating an increase in landlord repossessions in the coming months, Twomey underscores that lending institutions possess the capability to displace tenants from these properties. Notably, the existing agreement between the Treasury and lending institutions concerning support for mortgage holders does not extend to the buy-to-let (BTL) market, where borrowers typically hold interest-only mortgages.
According to statistics from UK Finance, during the second quarter of 2023, lenders repossessed 440 BTL properties. Additionally, a concerning 2,000 landlords find themselves more than 10% behind on their mortgage payments, indicating a looming crisis in the rental property sector.
UK Finance estimates that there are approximately 2 million buy-to-let mortgages across the UK. The recent surge in interest rates has significantly strained the financial positions of many landlords. The Bank of England projects that by the end of 2025, a staggering 40% of these mortgages may demand payments exceeding 80% of the rental income received, leaving little room for financial manoeuvring.
Given this predicament, Twomey argues that landlords falling behind on mortgage payments face an elevated risk of property repossession, leaving tenants in a precarious position with limited recourse. Twomey aptly highlights that eviction, stemming from the actions of others, is a profoundly disruptive event with potentially severe consequences for tenants, making it imperative to avoid such outcomes whenever possible.
In his impassioned letter, Twomey implores mortgage providers to engage in dialogue with Generation Rent, aiming to collaboratively explore and implement measures that can shield tenants from the fallout of landlord repossessions. This proactive stance underscores the importance of addressing the human impact of financial difficulties in the housing sector.