Homes for Ukraine hosts must keep up mortgage payments
In an update from the Building Societies Association (BSA), the trade body reiterated that lenders were supportive of the scheme and would be “flexible and pragmatic” with terms and conditions.
The scheme launched in March and allows individuals, charities, community groups and businesses to house refugees.
At the time, lenders said they were supportive of the scheme, but brokers called on further clarity as to whether the scheme may have implications on a borrowers’ mortgage.
The BSA said participants would need to make sure that they were making full mortgage payments while taking part in the scheme and lenders would recommend a sponsor to take this into account when registering interest.
It said that in certain instances lenders may not be able to support an application, which would be down to individual lender choice.
Examples include if a borrower has more than six months of arrears, repossession proceedings are underway, the borrower is in vulnerable circumstances or there is possible fraud of financial abuse.
It continued that each lender would make its own decision as to whether borrowers are required to inform them if they are participating in the scheme, with information available on their website as to what type of borrower they may need to hear from.
The BSA added that borrowers will not face additional costs from their lender to participate in the scheme.
Yorkshire Building Society announced last week that it would not require customers who have signed up to the scheme to inform them or provide additional information. There would also be no changes to their current mortgage product.
Shared ownership and buy-to-let eligibility
The BSA said those on shared ownership models would be eligible to participate, but individuals would need to check with individual housing associations.
From a buy-to-let perspective Ukrainian refugees would be “non-paying guests”. Model agreements for those that will share their home and those living in standalone properties are available on the government website.
The BSA said using the agreements available were not mandatory but recommended, and some mortgage lenders may ask for some kind of agreement to be signed, which they would state on their website.
The BSA noted that rent should not be charged under the scheme and so tenancy rights would not be created.
Lenders favour ‘light touch’ approach
The BSA said lenders were making their own decisions as to whether they would require an agreement to sign and whether borrowers would need to inform them of participating in the scheme.
However, it said the overall approach from lenders was to be as “light touch as possible”.
The BSA said further details are still being worked on with the Department of Levelling Up and Housing, including what would happen in if the relationship between a host and guest would break down.