The lender’s buy-to-let subsidiary, The Mortgage Works (TMW) announced on 27th February that it would stop lending to buy-to-let landlords with local housing authority (LHA) tenants.

It has now reversed that decision.

TMW is one of the biggest BTL lenders in the UK accounting for more than a third of all lending in the sector.

Last week TMW said that it was withdrawing from the LHA market, and would exclude tenants on benefits and from local authorities. The move was put down to concerns regarding the impact of the impending Government welfare reforms, including the introduction of universal credit, direct payment of benefits to tenants, and caps to local housing allowance payments.

Private landlords were quick to express their concerns, and industry experts condemned the move.

The National Landlords Association (NLA) said that it would result in landlords struggling to house LHA tenants, compounding the problems posed by a shortage of affordable social housing in the UK.

TMW subsequently reversed its decision and announced that it would remove the exclusion of LHA tenants from its terms and conditions.

Richard Napier, divisional director of mortgages for the Nationwide Group said:

“The buy-to-let sector is very important to us. We have listened to concerns that have been expressed by some of our customers, over the last few days, and believe this is the right way forward for The Mortgage Works, for landlords and for their tenants.”