RENTING? Check your LL has permission to let that property.

silvercar

fordy wrote:

If the landlord is currently living in the flat is it not likely that they don't have permission?

They couldn't have got a BTL mortgage if they lived in the property from the start. What they now should do is apply for CTL to their lender. Given that there is often a fee associated with this, most potential landlords would not pay the fee until they have a tenant.

If they don't gain CTL then the danger comes if they fall behind with their mortgage payments. If that happens to such an extent that the lender wanted to repossess (generally at least 5 months totally unpaid mortgage payments before a lender would get to court), you would have the protection of the 2010 law in this subject which would give you the right to inform the court of your tenancy and you would then get a further 2 months in the property before the lender possessed (though even then they would have to appoint bailiffs.

So the risk is, without CTL, if the lender failed to make mortgage payments at all, you could find yourself looking for somewhere else to live in 5 months time. Remember that repossessions are something like 0.1% of mortgage holders.
With CTL you have the right to remain for the fixed term of your tenancy (often 12 months) or be given 2 months notice after that.

MissMoneypenny

Perhaps you would like to phone MMA claims and ask if they will pay out on a house fire claim when the landlord has let the property; doesn't live in the property themselves and doesn't have consent to let? They answer their phones very quickly. Or get your broker to confirm this in writing to you?

It has to be better to have this in writing, just in case. It could cost thousands in repairs otherwise on a refused insurance claim and if the tenant is injured, a few thousand more. At least if the broker is incorrect, but has put this in writing to you, you should have a claim agains their insurers (I guess?) if they are incorrect?

MissMoneypenny

silvercar wrote: »

If they don't gain CTL then the danger comes if they fall behind with their mortgage payments. If that happens to such an extent that the lender wanted to repossess (generally at least 5 months totally unpaid mortgage payments before a lender would get to court), you would have the protection of the 2010 law in this subject which would give you the right to inform the court of your tenancy and you would then get a further 2 months in the property before the lender possessed (though even then they would have to appoint bailiffs.

Without Consent to Let, they won't honour the landlords tenancy agreement, which means that if you are in a fixed contract, they won't recognise the full term of that fixed contract.

This may mean that you still have to pay the landlord until the mortgage lender takes back the house or the fixed term tenancy ends. A big problem if you are looking to move your family out because of the impending repossession, but still have to pay the landlord their rent and the new landlord too.

If the landlord is a council tenant, then they are not allowed to rent out their house. The government are now looking to get new laws to make this a criminal act which will mean thay can then impose a prison term on those landlords.
http://www.bbc.co.uk/news/uk-16499636

tbs624

silvercar wrote: »

If they don't gain CTL then the danger comes if they fall behind with their mortgage payments. If that happens to such an extent that the lender wanted to repossess (generally at least 5 months totally unpaid mortgage payments before a lender would get to court), you would have the protection of the 2010 law in this subject which would give you the right to inform the court of your tenancy and you would then get a further 2 months in the property before the lender possessed (though even then they would have to appoint bailiffs.

So the risk is, without CTL, if the lender failed to make mortgage payments at all, you could find yourself looking for somewhere else to live in 5 months time

Would-be LLs who fail to get that CTL could ,of course, face a legal action from a T who finds that their FT is cut short.

silvercar wrote: »

Remember that repossessions are something like 0.1% of mortgage holders.

Don't know about that particular figure across the whole of the market but I think it is probably fair to say that it may be higher amongst those mortgage holders who are letting out without consent.Many of them are of course trying to let precisely because they are already in financial difficulties. Whatever the percentage, it's pretty crappy if you are the T who has observed all your own legal obligations and your LL cannot meet his.

fordy

CTL? Contract to let?

The amount of doubt i'm feeling about this place now is making me think of not bothering with it.

tbs624

CTL = Consent to Let

fordy

Sorry, its a lot to read.

MissMoneypenny

tbs624 wrote: »

Don't know about that particular figure across the whole of the market but I think it is probably fair to say that it may be higher amongst those mortgage holders who are letting out without consent.Many of them are of course trying to let precisely because they are already in financial difficulties.

Which will be about to get a whole lot worse when the new Universal Credits comes in, from what I understand of it. At present, the Tax Credits welfare payments don't take any capital into the claim, but next year they will. They will only exclude the equity of the property the claimant lives in.

Child Tax Credits, Working Tax Credits, Job Seekers income based, ESA income based (was Incapacity Benefit) and housing all going it seems and becoming the new Univesal Credits; with condidtions put in for claimants ie you will have to earn a set amount of money or prove you are job hunting for extra work. We will know more about the new Universal Credits and all the conditions for claimants, when they get published on the government website.

Just for good measure, DLA goes too and is being replaced by PIP, which will have medicals based on what you can do as oppose to the 'what you can't do' now for DLA claimants.

Even more important than ever to check the landlord has consent to let. Faced with a choice of taking a cut in their living standards from reduced welfare payments; paying the mortgage on the property the tenant lives in, with the tenants rent; or committing benefit fraud and pretending they live in the property they let; I wouldn't like to take a bet on which one people will choose.

silvercar

MissMoneypenny wrote:

Which will be about to get a whole lot worse when the new Universal Credits comes in, from what I understand of it. At present, the Tax Credits welfare payments don't take any capital into the claim, but next year they will. They will only exclude the equity of the property the claimant lives in.

It is right that someone who has money should not be claiming benefits when they could be looking after themselves. I understand that money tied up in a house can't be used to live off, but selling up to release money is an option that should be explored. Maybe the rules should allow a claim for a few months whilst a house is sold, but after that people need to understand that benefits provide a safety net, if you have money you need to untie it and live off it, until you sort your job situation out.

MissMoneypenny wrote:

Faced with a choice of taking a cut in their living standards from reduced welfare payments; paying the mortgage on the property the tenant lives in, with the tenants rent; or committing benefit fraud and pretending they live in the property they let; I wouldn't like to take a bet on which one people will choose.

Which is why I think CTL is a waste of time, either move to a proper BTL mortgage and let your property as a business or sell up.

If I was a tenant and would be more concerned as to whether a potential landlord's mortgage was up to date. If it was I would know that a 6 month tenancy would be safe. I would prefer that to a CTL on a resi mortgage with mortgage arrears.

franklee

silvercar wrote: »

So the risk is, without CTL, if the lender failed to make mortgage payments at all, you could find yourself looking for somewhere else to live in 5 months time.

Not necessarily unless you have a crystal ball. You and the questioner do not know that the mortgage is currently fully paid to date. There are plenty of threads here where a tenant has been moved in and then found out there were already arrears. Some have even moved in after the "Dear Occupier" letters were sent. What a tenant really needs to see is a recent letter showing the lender agrees to the let, then they have the best chance possible everything is in order at the start of the tenancy.

fordy wrote: »

Is it not the responsibility of the letting agent to know this before attempting to let the property?

They ought to especially if they are ARLA members but you need to ask to make sure as I bet many don't. If the agent fails to check and the tenancy is cut short then the tenant can pursue the agent but the best thing to do is to ask the agent in the first palace. If an ARLA agent hasn't checked then I'd be reporting that to ARLA.