26 June 2013
The Mortgage Works (TMW), part of the Nationwide Building Society Group, is to become the first mainstream buy to let lender to enable its borrowers to offer their tenants the option of a longer term contract.
Most lenders restrict buy to let borrowers by requiring them to offer their tenants a maximum contract of 12 months. By allowing customers the choice to offer longer term lets - up to three years - TMW’s new initiative will not only bring greater flexibility to the private rental sector in the UK, it also has the potential to provide more stability to the increasing numbers of people who rent homes privately. With this change, the Society is hoping to expand choice and innovation in the private rental sector.
In addition to facilitating longer term tenancies, the Society is set to launch a comprehensive new online independent Landlords’ Guide and the Nationwide Foundation has launched its new strategy aimed at creating decent, affordable housing for people in need.
Richard Napier, divisional director of mortgages at Nationwide Group, said: “The private rental sector has grown and changed phenomenally over the last few years, with rising numbers of families looking to rent in particular. We want our buy to let customers to be in a position to be able to meet the changing needs of the market.
“According to Shelter, one in five families now rent rather than own, so giving the option of longer-term tenancies will bring greater stability to renters.
“To help fulfil Nationwide’s pledge of helping 750,000 people into a home of their own over five years, we are developing innovative solutions to housing problems, and this development is another indication of that commitment.”
Campbell Robb, chief executive of Shelter, said: "This news is very welcome recognition that six or twelve month tenancies just aren’t working for England's nine million renters. More and more families are now renting their homes, but all too often short tenancies mean changing schools, leaving friends behind and growing up with constant upheaval.
"With two-thirds of renters saying they would like the option of staying in their home long-term, it's encouraging that Nationwide is leading the mortgage industry to help make renting more stable. We look forward to other mortgage lenders following suit."
Longer-term tenancies are the latest in a series of initiatives by the Nationwide Group aimed at supporting the growing and changing private rental sector. The new option significantly contributes towards the Society’s pledge of helping 750,000 people into a home of their own by 2017.
During July, the Nationwide Group will launch the latest in its range of independent and impartial guides, this time for landlords. The Landlords’ Guide clearly outlines what is expected of landlords on matters ranging from tenancy agreements through to safety checks. The guide, which will be hosted at www.themortgageworks.co.uk, will be available to download onto tablets and smart phones.
In addition, the Nationwide Foundation has launched its new strategy which aims to create decent, affordable homes for people in need. The Nationwide Foundation’s work aligns with the Your Home aspect of Nationwide’s Citizenship strategy and includes:
- Bringing empty properties into use as homes for people in need
- Improving the living conditions of vulnerable tenants in private rented sector homes
- Supporting alternative, scalable housing models which provide more affordable homes
Notes to editors
The Nationwide Foundation (registered charity number 106552) receives money from Nationwide which it uses to make grants and social investments to achieve the following outcomes in relation to the UK’s housing needs:
- Empty properties are brought into use as homes for people in need. Despite the current lack of housing stock, the UK has around 300,000 long term empty homes and many more empty commercial properties which could be used as homes. The Foundation funds organisations turning such properties into safe, decent homes for people on low incomes. It also raises awareness of the issues to other funders and government to encourage increased support for this activity.
- The living conditions of vulnerable tenants in private rented sector homes improves. According to IPPR, by 2016, 20% of all households will be privately renting. However in 2010 almost 1.4m private rented sector homes in England did not meet the government’s decency standards which are applicable to social housing (source DCLG). Lack of housing supply in the UK means that decent, safe homes are beyond the affordability of many vulnerable, low-income tenants. In addition, some rental contracts do not provide a decent level of security of tenure. The Foundation works to raise awareness of the issues, help vulnerable private tenants improve their own living conditions on a national scale, and works to increase the number of private rented homes which provide more favourable living conditions to vulnerable tenants.
- Alternative, scalable housing models provide more affordable homes and their value is recognised by other funders, lenders or government. The Foundation is therefore supporting alternative housing models which provide better living and new ownership opportunities for people on low incomes. This includes research into such housing models and raising awareness of them to try and elicit more support for such schemes.
Link to Nationwide Foundation:
Nationwide offers a range of independent guides giving impartial advice on a variety of financial subjects including: First Time Buyer’s Guide, HomeBuyer’s Guide, Homeselling Guide, Remortgage Guide and Green Home Guide. These can be found and downloaded from http://www.nationwide.co.uk/mortgages/calculators/overview.htm.
Over the next five years, under the pillars of Your Home, Your Money and Your Community, Nationwide will:
- Help 750,000 people into a home of their own (Your Home)
- Empower one million people to start saving (Your Money)
- Strengthen local communities by investing and unlocking £15 million directed by its customers and employees (Your Community)