Tenants Problems
Landlords defaulting on their loans on their residential investment property - It has been widely reported that private tenants have become the unwitting victims of repossessions, with many being evicted despite paying rent, as inexperienced landlords default on mortgages. Many of these tenants could be unknowingly renting under owner-occupier, rather than buy-to-let, mortgages without the lenders’ consent. The CML has stated that irresponsible landlords holding the wrong type of mortgage “will be in breach of the terms of the mortgage and potentially acting fraudulently.
The Council of Mortgage Lenders (CML) has released figures showing that the number of buy-to-let mortgages in arrears of more than three months stood at 26,800 at the end of 2008. This has more than tripled since the final quarter of 2007. Even more worryingly, the number of rental properties that were repossessed during the same period leapt from 600 to 1,300. Housing charity Crisis has predicted that 8,000 rental properties will be repossessed this year.
In absolute terms, the number of buy-to-let mortgages in arrears, in possession, or with a receiver of rent in place, is not large. And in most cases, the tenants of buy-to-let landlords who fall into arrears are able to continue to live in the property with sufficient notice to find alternative accommodation even if a lender does decide to sell. Buy-to-let lenders respect bona-fide tenancy agreements.
Therefore as a tenant make absolutely sure that the property has been approved by the landlords lender for rental purposes.
How do I know if my rental property is going to be repossessed? – Well the unfortunate answer is you don’t always find out. However from 6 April 2009 all tenants will receive increased notice of any court hearing for mortgage possession (around 5-7 weeks). Tenants need to open any correspondence addressed to "the occupier", as this is how they will receive notice of any action a lender might be taking against the borrower/landlord. Lenders send such a notice to all mortgaged properties where they are taking a possession claim to court, whether the mortgage is a buy-to-let mortgage or not. This means even tenants whose landlords have failed to inform their lender that they are renting out their property (which is always a contractual requirement of any mortgage) receive notice of any court action.
What if there is a change in my circumstances? – Do not ignore the problem as it will not go away. If you are unable to pay part/all of your rent, contact your Letting agent or Landlord immeadiately. They will be able to give you advise.
• Some landlords work with tenants to set up a payment plan if you know when you will have the money. A landlord's response will generally be based on your payment history.
• Seek help from an emergency assistance source or contact the Citizens Advice bureau.
• Ask yourself if there is anything that can be sold to obtain the needed rent money such as excess furniture, a camera, or a vehicle.
• If you are a tenant who privately rents and falls into arrears, it is worth knowing that landlords are unable to repossess a home unless they have a court order. However, there is a procedure available to landlords known as “Distraint” which allows the landlord to send in a bailiff to take your personal possessions and sell them in order to pay the rent. It is worth knowing that this action is only permitted if the landlord obtains permission from the court.
• Help is at hand for tenants in this situation or who are threatened with home eviction, or the bailiffs in the form of the National Debt Line where a useful leaflet is available. Tenants can also phone for immediate advice and find out information on council re-housing policy should they become homeless.
For all properties to rent, visit www.rentright.co.uk
Private Landlords – call HCR today to register your property www.hcr.co.uk