The insurer is among a number of firms who turned down cover for a British family who bought a house for asylum seekers

A British family have spent more than £400,000 buying a house in Brighton for Syrian refugees in an extraordinary act of personal generosity – only to find that major UK insurers rejected them when they tried to buy buildings insurance.

Direct Line, one of the UK’s biggest home insurers, told the family that it would not agree to sell them a buildings policy because the Syrian refugees would be on benefits. “We were totally thrown by it,” says the donor, who spoke on condition of anonymity.

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The family were subsequently rejected by other big insurers. Eventually they found cover – at twice the price they expected – through a specialist broker. “We wanted to help refugees in some way. We were moved by the plight of those in Syria and knew about the government’s scheme to move 20,000 refugees to the UK. We also knew that accommodation was a problem and that, in general, refugees are dispersed to the poorer parts of the UK as housing there is cheaper, which in turn means that in general employment is also more difficult for them to find. We are in the fortunate position to have recently come into some money from a bequest, and decided we could help at least one family by buying a house for them.

“It was on exchange of contracts that we tried to obtain buildings insurance, and were surprised this was either refused or charged at a higher rate if the tenants were refugees – and, perhaps more alarmingly, benefits claimants.”

In a statement Direct Line said: “Unfortunately we are unable to provide landlord insurance for tenants receiving housing benefits. However, if tenants are on disability benefits, employed, in full-time education or retired we would be able to offer them a quote.”

The saga throws a fresh spotlight on the wider problems faced by the UK’s 4.6 million housing benefit claimaints, who face rejection if they want to rent from a private landlord.

Many major lenders and insurers have clauses in their contracts which expressly forbid landlords from accepting tenants who are on benefits.

Direct Line’s website, where it boasts it has provided insurance to 240,000 landlords, includes an FAQ section where the question “Do you cover properties that have DSS tenants?” is answered: “No, we don’t currently cover properties where all of the tenants are unemployed and claiming benefits.” In addition it says it will not give cover to landlords who house asylum seekers.

Fergus Wilson, the controversial property tycoon who is one of Britain’s biggest landlords, provoked a furore when he said he would evict 200 tenants who were on housing benefit. But this week, in correspondence with his local MP, Wilson said he is forced to evict tenants on benefits because the conditions in his loans from Mortgage Express, now owned by the UK government, exclude tenants on housing benefit.

Despite the anonymous donor’s problems with finding insurance in Brighton, he is pressing ahead with buying more properties to house Syrian refugees. “I wouldn’t say we are multimillionaires. In fact, we were burgled and they hardly took anything because we are not the type who buy jewellery.

“I come from a terraced house in Salford and I have always had a lot of sympathy for the poor. People who know us say we are not working class now, and it’s true, we live in a big expensive house. But I still have an outlook that is sympathetic to people less fortunate than us.

“We plan to buy a few more homes in the area. Brighton is a very accepting community, it’s quite multicultural and has a large LGBT community. We think people here will be accepting about Syrian refugees and the issues that they face.”

The donors say they want anonymity “so that the refugees do not feel in any way beholden to us. We just want to be able to help out, and maybe one day we’ll meet them by accident”.