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Tenants groups are in an uproar after a shady clause in Santander buy to let mortgages has come to light. The lender, who first entered the rental market in 2011, has a clause buried deep in its mortgage contracts that states landlords must raise their rents as high “as can be reasonably achieved”.
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The clause goes on to state that rents must be reviewed by an independent valuer when they come up for renewal and a copy of the valuation must be passed on to the lender.
Increasing Pressure on Landlords
Even though the Santander clause has been present since 2011, it has only come to light as landlords are facing increased pressures on their income now that tax changes are being implemented. Many landlords are scrutinising their mortgage contracts to see where they stand if they can’t make the repayments.
Freedom to Set Rents
Santander is unrepentant. They say it is a perfectly normal clause in a mortgage contract, as landlords are required to set rents at market rates in order to be able to serve their debt. But as critics point out, landlords often agree to rents below market values in order to retain a reliable, loyal tenant. If landlords don’t have the freedom to set rents, there is a risk of excessive market churn and rental properties lying empty.
