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Zero hours workers face mortgage struggle

Julia Rampen
Written By:
Julia Rampen

Workers on zero hours contracts could struggle to take out a mortgage from the UK’s biggest lenders because they do not fit into regular criteria.

Of the four high street lenders surveyed by Your Money‘s sister title, Mortgage Solutions, only HSBC confirmed that the question of whether a worker was on a zero hours contract would be irrelevant to their mortgage application.

Lloyds, which controls roughly a fifth of the UK mortgage market, does not include zero hours contracts among regular criteria. A spokeswoman said: “We consider a range of income sources when assessing affordability including part time, overtime and contractual workers.

“However if any income is from a zero hours contract we would not as standard include this element as part of our applications assessment. Where appropriate we do review applications on a case by case basis.”

Zero hours contracts would not usually be considered in buy-to-let cases either, she confirmed.

Nationwide and Barclays both said they considered zero hours contract workers on a case by case basis. A Nationwide spokeswoman said: “Nationwide doesn’t automatically decline a mortgage applicant because they have a zero hours contract.

“Each application will be assessed on its own merits and the society will look at the applicant’s history of earnings.”

Between 25,000 and one million workers are estimated to be employed on zero hours contracts, in which a worker and an employer set up a contractually-based ‘on call’ arrangement. The employer is not obliged to provide work for the employee and the employee is not obliged to accept the work offered.

Such workers are most likely to be based in the voluntary and public sector, according to the Chartered Institute of Personnel and Development.

An HSBC spokeswoman said the customer’s employment contract was irrelevant: “As long as you can show you have got a regular income that is affordable to the level of borrowing you are looking for that would be fine.”

Public sector union UNISON assistant general secretary Karen Jennings said: “The response from mortgage lenders illustrates just one of the many problems facing zero hours workers – namely financial uncertainty and instability. This affects whole areas of a family’s life from housing to childcare, the higher risk of debt and the use of unscrupulous payday lenders.”

She said UNISON was calling for zero hours contracts to be outlawed: “The Government claims it wants to help first time buyers but for millions of people the possibility of owning their own home is a distant dream.

“The lack of a decent house building programme, the threat of redundancy, the pay freeze and squeeze and under-employment all make getting on the housing ladder that much harder.”