If you plan to let a property to tenants in receipt of DSS benefits, you will need to secure a special mortgage. Many lenders are still nervous about DSS benefits, as they consider these to be higher risk tenants. There is an outdated belief that those on benefits are more likely to miss rental payments which will have an impact on the borrower’s ability to make their mortgage payments.
Some lenders will justify their stance by pointing to the fact that they have experienced a higher number of repossessions from properties with DSS tenants. They might also point to past experience of DSS tenanted properties being kept in a lower than average standard. In the event of repossession, this could make the property more difficult to sell.
The vast majority of landlords would be willing to let a property to DSS tenants, but their mortgage provider won’t allow it. It is down to the landlord to seek out a buy to let mortgage provider that will consider applications on a case-by-case basis.
There is an argument to say that DSS tenants will be more reliable with their rental payments, as their income is provided by the government. There is no risk the tenant will lose their job and be unable to make payments. Financial advisors will tell you that a Government-backed investment is “no risk” because the government has never failed to meet its commitments. Yet when it comes to DSS tenants, there is the belief that this carries higher risk.
Professional landlords often prefer DSS-supported tenants as there is always a steady supply of tenants and they have a secure form of income. This reduces the chance of void periods that are more common with non-DSS tenants.
There are some good lenders out there who are willing to work with DSS-tenanted properties. If you are a landlord hoping to secure a buy-to-let mortgage that allows you to accept DSS tenants, get in touch with Niche Mortgage Info today.
We can help to connect you with the right lenders and secure a mortgage that works for you. Remember that a mortgage that allows you to accept DSS tenants doesn’t limit your choices but rather broadens them. You’ll have a greater pool of tenants to choose from, allowing you to limit void periods.