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Santander under fire under its BTL mortgage clause

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Santander is taking a step back and reviewing a clause within its Buy to Let (BTL) mortgage contract that requires landlords to raise rents by “as much as can be reasonably achieved” whenever possible.

The wording - which was exposed by Mortgage Strategy magazine on 1st February following contact by a private landlord who had spotted the clause in her mortgage contract - has been present in Santander's contracts for almost six years.

It has, however, attracted strong criticism from other companies within the industry who say it “doesn’t square very well with the best interests of consumers” and is “excessive and disproportionate”.

In response, a spokesman for Santander disagreed with the criticisms of the policy said: “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.

“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.” 

Santander has now done a U-turn. Following the publication by Mortgage Strategy, they have said they will review the clause with a spokesperson adding: “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.”