pensioner cant pay mortgage now tenant has left

mrsS_2

hi- hope someone can please advise

I have an elderly friend who unfortunately put his life savings into buying flats offplan he thought he would be rich, but obviously it has been an absolute disaster. He has lost most of his money and is now in a council flat with a limited income.

His only property that has so far actually been built (there is a 4 year delay on a property in spain that will never actually get past foundations stage as there was no planning permission!!) is in a very bad area of a northern city and he tenant left last month and he doesnt seem to be able to get a new one- Housing benefit tenant would be fine but there are just so many flats available fo rent up there.

He cant pay the mortgage without a tenant and his fixed rate mortgage comes to an end next month, with the repayments nearly doubling, but no rent.

He is 67 and on a pension- I dont know what he can do?

He has spoken to the mortgage company and they want his proposals as they know they wont get paid this month.

He put the flat on the market as soon as tenant moved out, but even if he gets asking price, there is a £30000 shortfall on the mortgage, which obviously he doesnt have sitting in the bank account.

I dont think he can just hand back the keys as they have said they will persue him through the courts and make him bankrupt.

Unfortunately he does have a peice of land which may be worth something one day, when he finishes improving it-it started off as a field and will in another 2 years become a fishing lake. He is adamant that he cant lose this land as this is all he has left and wants to leave it to his daughter when he dies. It is only worth a few thousand now as it is agricultural land but when finished could be worth over £100k- assuming can find a buyer! but still 2 years away from that.

He has joined a class action with the other owners in the block because of alleged mis selling by the property company, over inflating rent yeilds etc but that is probably irrelevent here.

any helpful advice would be gratefully received.

thankyou

bookduck

If I were him I would go to CAB asap and get recommended to a free and reputable debt counciling advice. Not those consolidation ones on TV.

At worst Bankruptcy will at least rid him of the millstone around his neck, at best he will leave with something. I just hope he does not keep paying just to keep the people off his back.

Selling the land now at auctions. Put it on in on the day before, or better still the morning before bidding takes place in a public auction, also making it the last bid of the day, as the family will probably get it cheaper and will be legal

foreign_correspondent

how is he trying to let his flat - I would try all avenues, a good letting agents, local rag, cards in newsagent window, asking neighbouring flats if they know of anyone looking, as letting that would alleviate one problem.

Re: the land - I have no idea what the law on this is but could he legally gift it or sell it to his daughter now as the value is relaivelty low, then help her to inprove it?

Rabiddog_2

How did 67 year old get a mortgage (or multiple mortgages) surely some mis-selling there? possibly an unenforceable contract. They might pursue(not underlined in red)

lisyloo

I have no idea what the law on this is but could he legally gift it or sell it to his daughter now as the value is relaivelty low, then help her to inprove it?

Selling it to her at current market value is a great idea.
Firstly it means he won't lose it and because it's current market value it will be above board.
Also assuming this is a good plan, she gets a great investment.

I doubt he could give it away. I suspect there are laws in place to stop you giving things away before (potentially) going bankrupt.

The only doubt I have is that this is just another scam he's been sold and the potential mentioned is not really there.
The economic climate is going to be difficult the next few years and land prices are likely to drop.
We don't know whether the daughter will be interested in such a project or whether she is in a posistion to buy it.

FraudBuster

I suspect there are laws in place to stop you giving things away before (potentially) going bankrupt.

You are correct.

http://www.insolvency.gov.uk/

dunstonh

How did 67 year old get a mortgage (or multiple mortgages) surely some mis-selling there?

Buy to let mortgages are unregulated.

If there is sufficient deposit and the rental yield is enough then it should be justifiable. It is not the place of the lender to decide whether the investment is viable. Just that there is enough to repay the monthly commitment.

Mortgaged buy to lets are a high risk transaction. Flats are higher risk than houses. Buying off plan is even higher risk. Buying abroad even more so.

lisyloo

Also worth mentioning that BTL mortgages rely on RENTAL income and not personal income.
Whilst personal income would be expected to decline after retirement, there is no obvious reason why rental income should drop based on the landlords age, therefore I can't see any mis-selling reason here.

Uncommon_Advice

This situation has been replicated up and down the UK -and isn't easy to get out of. Why does your friend not move into the flat in the short term, and sell his current residential property?

mrsS_2

thanks for all the replies . unfortunately the chap doesnt really want to move from his council flat up north about 250 miles away from his daughter.:rolleyes:

I will get him to go to CAB about gifting the land to her although as you say there may be some legal issues with this.

thanks again everyone

epz_2

if the land is only worth a couple of grand at the moment then whats to stop him legitimately selling it so his daughter and then doing it up after he goes bust.

fact is he gambled big and lost, at his age a 30k loan will be problematic and its unlikely that he will ever be able to get another mortgage due to age rather than credit history so why not just suck it up and go bust.