Posts with tag: Santander

Santander to get rid of controversial mortgage clause

Published On: February 20, 2017 at 11:09 am

Tags: Buy-to-Let,landlords,mortgage clause,Santander

After much controversy, Santander has said it is going to scrap its buy-to-let mortgage contract clause, that requests landlord to increase rents by, ‘as much as can be reasonably achieved’ where possible.

This controversial wording was exposed last month by Mortgage Strategy, after a private landlord has spotted the clause in her mortgage contract. It appears that the clause has been in Santander’s contracts for nearly six years.

Wording

The landlord in question noted: ‘The public views landlord as greedy, but how many people are aware that landlords are being forced to increase rents by banks such as Santander?’[1]

‘The Santander contract states that when rents are up for renewal the landlord must get written advice from a qualified valuer (as to) whether the market rent at the date of the review is likely to be higher than the rent currently payable.’[1]

Unsurprisingly, the clause has been slammed by leading industry figures.

Santander to get rid of controversial mortgage clause

Ray Boulger, senior technical director at John Charcol, observed: ‘This doesn’t square very well with the best interests of consumers.’[1]

Meanwhile, Lucy Hodge, managing director at Vantage Finance, called Santander’s clause as: ‘excessive and disproportionate’, stating she could not see: ‘any sense in it whatsoever.’[1]

Last week, a Santander spokesperson stated that the policy was under review, but said, ‘it is for the landlord to set a rent that both they and the tenant agree upon.’ Now however, the bank has moved to drop the clause altogether after acknowledging that, ‘it can be misunderstood.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/santander-tells-landlords-to-raise-rents-by-as-much-as-can-be-reasonably-achieved

Backlash over Santander mortgage clause continues

Published On: February 16, 2017 at 2:13 pm

Author: Em Morley

Categories: Finance News

Tags: buy-to-let mortgage,landlords,rents,Santander

The backlash towards Santander rumbles on, following last month’s revelations of a clause in its buy-to-let mortgage contracts requiring landlords to raise rents by, ‘as much as can be reasonably achieved.’

Now, The Acorn Group, which lobbies for a more ethical letting policy, plans to hold demonstrations outside Santander branches across England this Saturday.

Rents

The Santander contract says when: ‘rents are up for renewal the landlord must get written advice from a qualified valuer (as to) whether the market rent at the date of the review is likely to be higher than the rent currently payable.’[1]

Acorn members are hoping to get signatures for a nationwide petition, which calls for Santander to drop the clause.

An Acorn spokesman said: ‘Santander Bank is screwing tenants with a clause in their buy-to-let mortgages requiring landlords to charge maximum possible rent. We’ll be picketing them, collecting signatures for our petition and handing out leaflets to inform the public of their dodgy practices. It’s a day of action demanding that they scrap the clause.’[1]

‘Private tenants in the UK already pay the highest rent in Europe. Average rents have increased faster than wages, and Santander made £2 billion profit last year have been forcing up rents since 2011 with this clause. With tenants facing a triple burden of insecurity, poor standards and already extortionate costs, Santander’s lust for profit above all else is making it harder for tenants to afford a home,’ they continued.[1]

Backlash over Santander mortgage clause continues

Calls

Moving on, the spokesperson said: ‘We are calling on Santander to scrap the clause in its contracts and enable landlords and tenants free to negotiate costs

If Santander do not act quickly to remove the clause, it will not only continue to put pressure on hard-pressed renters, it will continue to threaten long-standing relationships between responsible landlords and their tenants.’[1]

Responding, a Santander spokesperson said that their policy is under review.

They noted: ‘We recommend that landlords should set their rents at a prudent level that is fair for the tenant and based on market rates, ensuring that they are able to continue to service their mortgage. The clause in question has formed part of our mortgage terms and conditions since we re-entered the buy-to-let market in 2011. It forms part of our terms and conditions because it is important to us that our customers can continue to afford their loan repayments.[1]

“It is in no-one’s interest for a landlord to default on a loan (including the tenant). We recognise that it is for the landlord to set a rent that both they and the tenant agree upon. As with all our products, the mortgage terms and condition remain under constant review and we will review this particular clause now that we are aware that it can be misunderstood.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/tenants-backlash-against-santander-over-mortgage-clause-continues

Tenants outraged by Santander contract clause

Published On: February 2, 2017 at 10:20 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,landlords,rents,Santander,tenants

Tenants and housing groups have vented fury towards Santander, after the lender included a clause in its buy-to-let mortgage contracts that requires landlords to raise rents by, ‘as much as can be reasonably achieved.’

Despite the wording appearing in Santander’s contracts since 2011, it has only just come to light, as buy-to-let investors continue to feel the pressure of the raft of recent tax changes.

Outrage

A private landlord who spotted this clause in her contract, subsequently contacted industry Mortgage Strategy.

Talking to the magazine, the landlord said: ‘The public views landlords as greedy, but how many people are aware that landlords are being forced to increase rents by banks such as Santander?’[1]

The Santander contract states that when rents are up for renewal the landlord must “get written advice from a qualified valuer [as to] whether the market rent at the date of the review is likely to be higher than the rent currently payable,’ she added.[1]

Santander requires a copy of the valuer’s advice in these circumstances and goes on to say: ‘If the valuer advises that the market rent at the date of the review is likely to be higher than the current rent, you will take all steps to ensure that the review takes place and leads to the maximum increase in the rent which can reasonably be achieved.’[1]

Reaction

One of the UK’s leading mortgage commentators, Ray Boulger, believes the clause, ‘does not square very well with the best interests of consumers.’[1]

Dan Wilson Craw of campaign group Generation Rent, noted: ‘This behaviour is undermining landlord-tenants relationships. Most of the time landlords won’t raise because they want to keep reliable tenants. Being forced to maximise returns will result in unnecessary churn in the market and the destabilisation of tenants’ lives.’[1]

James Daley, director of campaign group Fairer Finance, observed that the clause is: ‘Ethically, it’s absolutely the wrong thing to do. The market for rents should be competitive, and landlords should have the freedom to set rents that tenants can afford to pay and are willing to pay.’[1]

Tenants outraged by Santander contract clause

Disagreement

Responding to the criticism, a spokesman for Santander said: ‘The contract has been in place and remained unchanged since we entered the market in 2011. Landlords should set their rents at a prudent level that is fair for the tenant (based on market rates) and that ensures they can continue to service the debt. Our interest is that the landlord ensures they can continue servicing the loan.’[1]

‘Any potential to increase the rent is only that which can be ‘reasonably achieved’. There is plenty of discretion for the landlord to set a rent that they and the tenant agree, and no direct obligation imposed by us that the rent should be the maximum possible,’ they added.[1]

[1] http://www.telegraph.co.uk/investing/buy-to-let/santander-tells-buy-to-let-landlords-raise-rents-maximum/

Santander Breaks the Trend

Published On: November 29, 2013 at 3:53 pm

Author: Em Morley

Categories: Finance News

Tags: mortgage rates,Santander

Recent months have seen landlords being unfavourably affected by a sudden rise in interest rates on their mortgages. The Bank of Ireland case, in which they increased the margin differential on their lifetime tracker mortgages, has been particularly exposed.

Many banks have moved away from lending for buy-to-let purposes on account of the risks involved in letting private properties. Recent reports, however, have revealed that Santander have broken the trend and loosened their criteria for landlords. This is to open up to amateur landlords.

Santander Breaks the Trend

Santander’s director of retail assets, Phil Cliff, discussed the new measures, saying: “The buy-to-let market is continuing to see strong growth and the latest improvements to our criteria herald the next step in our journey to becoming the intermediary partner of choice, demonstrating our continued commitment to this market.

“We’re keen to support the non-professional landlords sector and will continue to review our buy-to-let criteria to ensure we’re offering your clients the right mortgage with features to meet their needs now and in the future.”

The lender has reduced their buy-to-let affordability rate from 6% to 5%. The maximum loan size per property will also be increased, from £500,000 to £750,000 from Friday 27^th September.

In addition, the Buy to Let Business Managing Director, Ying Tan, said: “This is fantastic news. Lenders are solely but surely moving more towards larger landlords who have been neglected during the past few years. Santander is one lender that can start to compete with BM and TMW with its balance sheet and proposition. It’ll certainly get business.”1

Under the revised criteria, landlords with a maximum of seven buy-to-let properties will be able to apply for a buy-to-let mortgage with Santander Intermediaries, while those with up to five properties can apply to Santander.

The minimum gross rental income requirement remains at 125% of the mortgage payment. Applicants must already have a residential or buy-to-let mortgage. At least one of the borrowers must be employed and earn over £25,000 per annum. Houses in multiple occupation are not eligible.

Additionally, the lender will also consider applications from those who have a minimum of one and a maximum of ten secured credit commitments at the time of application.

Santander is also launching a range of two-year residential track mortgages available up to 90% loan-to-value, with no early repayment charges.

With a high demand for private rental property, it is unsurprising that Santander aim to take a larger share of the buy-to-let lending market. However there are risks involved. Since the recession, evictions due to rent arrears have increased, meaning that landlords are more likely to miss one of their mortgage repayments without rent guarantee insurance. Any landlord thinking of applying for a mortgage through Santander in the near future should ensure they are financially secure and can realistically afford the repayments.

1 http://www.justlandlords.co.uk/news/Santander-Relaxes-Lending-Criteria-for-Landlords-1780.html