Generation Rent appeals to mortgage lenders not to evict tenants

In a bid to safeguard tenants facing potential homelessness when a landlord falls into BTL mortgage arrears, one tenants’ rights group is urging mortgage lenders to uphold their ‘moral obligation’ not to evict tenants.

The call comes from Generation Rent and its chief executive, Ben Twomey, has written an open letter to the chief executives of four major mortgage providers.

In it, he urges them not to evict renters from properties owned by landlords who are struggling with defaulted mortgages.

The appeal comes as a response to the growing number of repossessions of landlords by lenders – a trend that looks set to grow in the coming months.

‘Severe consequences for the tenant’

With no wiggle room for landlords, Mr Twomey writes: “Eviction resulting from the actions of someone else is a very disruptive act with often severe consequences for the tenant that should be avoided wherever possible.

“It therefore seems likely that landlords behind on mortgage payments are at a higher risk of repossession and there is nothing their tenants can do about it.”

He adds: “I would like to know what your institution is doing to prevent tenants from losing their homes if their landlord is repossessed, and if you have a policy of acting as or appointing a receiver of rent to allow tenants to stay in their homes and carry on with their lives.”

Treasury agreement does not cover the buy to let market

Unlike the support extended to residential mortgage holders, the recent agreement established between the Treasury and lending institutions does not cover the buy to let market.

This gap leaves landlords with a BTL mortgage – and most of those are interest-only mortgages – vulnerable to arrears.

According to a recent report from UK Finance, the second quarter of this year saw the repossession of 440 buy to let properties.

And another 2,000 landlords fell more than 10% behind on their mortgage payments.

The figures underline the mounting pressure that landlords are under due to increasing interest rates.

‘Evict the tenant of homes they repossess from landlords’

Mr Twomey says: “We know that lenders have a right to evict the tenant of homes they repossess from landlords, using Section 21 or Section 8 Ground 2 of the Housing Act.

“A no-fault eviction results in stress for the tenant, particularly when rents have been rising as they have been.

“Finding a new, affordable place to live can drag tenants away from their workplaces, families and schools.”

2 million BTL mortgages currently active in the UK

There are around 2 million BTL mortgages currently active in the UK, according to UK Finance, but landlords are finding themselves in a tight financial position.

The Bank of England has estimated that by the end of 2025, up to 40% of these mortgages could potentially have payments that are 80% higher than the rental income received.

Mr Twomey’s open letter goes beyond an appeal for tenant protection and extends an invitation to mortgage providers to engage in discussions with Generation Rent.

The aim of these discussions would be to formulate effective measures to help shield renters from the loss of their homes – and boost their security in the current housing market turmoil.

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