Paying six months rent in advance & repossesions

greeneye

I wonder if anyone clarify the bit in bold below (it's from the forum sticky).
I'm thinking of paying 6 months rent in advance for a property via a letting agency.
The sentence in bold is a tad ambiguous does it mean the mortgage company is legally obliged to allow me to stay in the property for the full remaining term of the rental contract?
Or that I would only be given a reasonable amount of time to find new accomadation. If the latter how and when do I get my money back - i.e would I have to wait for the property to be sold by the mortgage company?
Also (before writing to landlords mortgage company) how exactly can I establish that the landlord has permission to rent i.e what documents should I be asking the landlord for?
Thanks in advance for any advice.

"It is important to check that your potential LL has the permission of their mortgage lender to let out the property. This is important because if the mortgage lender repossess the property, and they didn't give the LL permission to let, then the tenant can be made homeless immediately. However if the lender did give the LL permission to let, then they will honour the terms of the rental agreement - meaning the tenant will not lose any rent they have paid up front, and they will have time to look for new rental property. If you are not able to ask the LL/LA, then for £3 you can download the property documents from Land Registry Online - this will show the mortgage lender. If the mortgage lender has the landlord down as living in the property then they probably don’t have their lenders permission to let. You can also write to the mortgage lender and ask them directly."

ruggedtoast

Firstly where did this information come from?

Secondly, how to establish if they have permission seems to be in the quote unless I'm missing something, or youre worried its not accurate.

This:

However if the lender did give the LL permission to let, then they will honour the terms of the rental agreement

I've never heard of this personally; the AST is between you and the landlord not the lender.

I have friends who've been evicted on their landlords repossession, the court advised them they should get 3 weeks to go, but then no one sent them notification so they ended up having less than one week, and they never saw their deposit again.

The second time it happened (with the next landlord) they immediately stopped paying rent and just moved out as soon as they found somewhere.

m_13

Are you in England? From the Shelter England website:

Is my tenancy binding on the landlord's lender?

In very limited circumstances, your tenancy may be binding on the landlord's lender. This means the lender will become your landlord after the repossession and will need a separate court order to evict you. Most tenancies are not binding on the lender, but there are exceptions. You may have a binding tenancy if:

• you were already living in the property at the time the mortgage was granted (eg as a sitting tenant or when the landlord took out a second mortgage)
• the lender specifically agreed to the tenancy
• the landlord's lender has recognised the tenancy in some way (eg by asking you to pay rent direct to them or by accepting rent from you). Most lenders will avoid doing this or will call the payment something other than 'rent'.

If you are unsure about when the landlord's mortgage started, ask your landlord, or get advice to find out whether the tenancy is binding. An adviser may be able to confirm this via the court, the lender, and/or the Land Registry.

What if my tenancy is not binding?

Most tenancies are not binding on the lender. If you are in this situation and your home is being repossessed,you must take action as soon as you are aware of the repossession.

You may be able to do the following:

• Persuade the lender to take over as landlord and/or to give you more time.
• Ask the court to suspend or set aside the warrant for possession to allow you time to find alternative accommodation. An adviser can help if you need to do this.
• Use publicity, as local and national media may be interested to hear about tenants who are the innocent victims of repossession. Publicity may encourage the lender to allow you to stay on.
• Seek compensation from the landlord. The court can award damages for loss of the tenancy and/or for storage and emergency accommodation costs. The court cannot reinstate you in the property. You should also bear in mind that if your landlord has lost the property due to mortgage arrears, there may not be any money left after the mortgage has been repaid.

Once the lender gets a possession order you will have no right to stay in the property and the lender may change the locks. You should however, be allowed access by the bailiffs so that you can collect your belongings

Are they offering you some advantage for paying up front rather than having the money in your account earning (a little) interest?

I'm presuming you are taking an Assured Shorthold Tenancy for the 6 months?

If you have a fixed term tenancy (for a set period, such as six months) your landlord can only give you notice during the fixed term if:

• they can prove a legal reason to evict you (or 'ground for possession')
• the notice does not expire until after the fixed term has ended
• there is a 'break clause' in your tenancy agreement.

If your landlord can prove a ground for possession, you are entitled to either two months or two weeks notice, depending on the reasons for the eviction.

What reasons for eviction can be used?

The reasons (or 'grounds') that landlords can use to evict assured tenants are in two groups: 'mandatory grounds' and 'discretionary grounds'.

Mandatory grounds

If your landlord is using a mandatory ground the court has no choice but to make a possession order if it is satisfied that the ground exists. Examples of mandatory grounds include:

• more than eight weeks rent arrears
• repossession by mortgage lender (if prior notice of the possibility of this was given)
• redevelopment of the property.

Discretionary grounds

If your landlord is using a discretionary ground for possession the court will only make a possession order if it is reasonable to do so. Examples of discretionary grounds include:

• some rent arrears
• persistent delays in rent payments
• breach of tenancy agreement
• nuisance or illegal behaviour
• deterioration in the condition of the property.

There's no protection offered by paying six months in advance other than sometimes removing the need for a guarantor.

Gingernutmeg

From a personal point of view, OH and I did this once and we've sworn that we'll never do it again. In our case, it seemed to be an excuse for both the agency and the landlord to do absolutely nothing for six months - including things like gas safety checks and essential maintenance. The general attitude was, 'we've got your cash, that's all we're bothered about, so there's NOTHING you can do to make us do anything'. I'm not saying that tenants should ever withold rent but the fact that you're paying on a monthly basis does seem to encourage some agencies to remember their manners a bit more.

Regardless of the issues surrounding repossession, I would really say that unless you absolutely have to paying rent in advance is a really bad idea. You gain no more security from doing this and potentially it could make things difficult for you.

greeneye

ruggedtoast I got it from the sticky thread at the top of this forum :
A tenants guide to renting:
http://forums.moneysavingexpert.com/showthread.html?t=937335

M_13 have just spoken to the Shelter advice line in the time it took you to post, seems like you and ruggedtoast are both correct and the sticky is inaccurate (or at least a bit ambiguous).
Shelter adviser said that the mortgage company is under no legal obligation whatsoever to honour any contract you may have with the landlord even if the mortgage company has given the landlord permission to rent. And your only avenue would be to take the landlord to court.
Perhaps the sticky may need updating as it does seem to be inaccurate /easily misinterpreted
And M_13 yep I was trying to avoid providing a guarantor.

ruggedtoast

When we came back to the UK we had no jobs and no guarantor. We paid 6 months in advance and it was fine. Ended up staying for 3 and a half years in the end.

If you're worried about it how about asking it be held legally as a large deposit, then it should be protected by the TDS.

Edit - say, three months rent in advance and three months held as deposit? I dunno - worth a try, a lot of LLs would go for that.

silvercar

I don't want to correct the advice given to you by SHelter, but there have been court cases reported on here, where tenants have been told to pay the lender as the property is repossessed and there have been auctions which state a tenant is in situ subject to an AST. Both would suggest the lender has accepted that the tenants have rights to stay in the property.

MissMoneypenny

silvercar wrote: »

I don't want to correct the advice given to you by SHelter, but there have been court cases reported on here, where tenants have been told to pay the lender as the property is repossessed and there have been auctions which state a tenant is in situ subject to an AST. Both would suggest the lender has accepted that the tenants have rights to stay in the property.

How can the tenant pay the lender, if they have already paid the landlord 6 months up front?

MissMoneypenny

greeneye wrote: »

Also (before writing to landlords mortgage company) how exactly can I establish that the landlord has permission to rent i.e what documents should I be asking the landlord for?

This thread about checking that landlords have permission to let from their lender, should help you.

http://forums.moneysavingexpert.com/showthread.html?t=1377883