Our Landlord has stopped paying his mortgage

Irish_Andy

Hi - Help!!

So we've been in our flat for about 17 months now (since we got married in fact!). We initially signed for a 12 month contract through a high street letting agent. At the end of the 12 months we didn't have the deposit to buy, so we signed for a second 12 month assured shorthold.

We are now about 5 months in to the second term and have learned that the flat is in receivership. So instead of paying our rent to the agent as we had been, we are now paying it to a receiver who is in effect our property manager. As I understand it, the landlord has no right to sell the property (so we can't put in a cheeky offer) and the bank can't sell it either as it hasn't been fully repossessed!

So, the question for all you intelligent people out there is: What can we do? The 2nd lease runs up in September but are we able to leave the property early and stop paying rent?

We are pretty much there with the deposit we require for a purchase, so we'd like to get out of this place ASAP before we get bailiffs on the door telling us to get out in 3 days!!

Thanks for your help!!!

BitterAndTwisted

No, you are not! You have a legally binding agreement and you can't wriggle out of it however much you would like to. Expect a Section 21 (Notice to Quit) to arrive at any moment which will come into effect as soon as your agreement comes to an end.

Get saving up for the deposit and rent in advance for your onward move right away!

Fire_Fox

If the receivers know you exist and are happy to take your rent they have effectively become your landlord, I don't see that bailiffs will turf you out in three days you will be served proper notice to quit like any other tenant. Tenants get evicted at short notice when the lender does not recognise their tenancy, which has not happened here.

property.advert

If it goes to a sale, does your lease not have a clause in it for you to match any offer ? Very common overseas.

Also, if it does go to sale, would you want to buy it ?

They save:

Voids
Estate agency fees
Distressed sale discounts

You save

Moving costs
Buying and renting at the same time
You know the property
You should get a lower than market price as you are an easy buy.

You may well be in a position to get a deal and I would look into it quite hard if I wanted to own the property I was renting.

franklee

Anyone new collecting the rent should have sent you a letter detailing who your new landlord is and giving you an address in England and Wales for the service of notices. So in your case I'd be contacting the landlord or in this case the receiver, and asking them what their plans are regarding giving you notice.

Thing is your tenancy agreement is binding on you till the end of the fixed term (unless there is a break clause you can use) but you can be given notice to leave before then under Section 8 Ground 2 that the mortgagee is claiming possession. . This would give you two months notice and can ask you to leave before the fixed term ends. So you may as well find out their plans and see if that helps you any.

The above assumes the tenancy is binding on your landlord's lender, if it isn't then you have no rights to notice when there is a repossession. That the receiver is collecting rent may indicate they have recognised the tenancy, but I'd be wanting to double check that with them to be sure as there is wriggle room for them not to have.

For more on Section 8 see here:
http://www.letlink.co.uk/letting-factsheets/factsheets/factsheet-8-claims-for-possession-the-section-8-notice.html

To see if a tenancy is binding on the landlord's lender see here:
http://england.shelter.org.uk/get_advice/eviction/repossession_by_a_landlords_lender

franklee

BitterAndTwisted wrote: »

No, you are not! You have a legally binding agreement and you can't wriggle out of it however much you would like to. Expect a Section 21 (Notice to Quit) to arrive at any moment which will come into effect as soon as your agreement comes to an end

You forget possible break clauses in the tenancy agreement.

Also you have no way of knowing the mortgage lender will hang on waiting for the end of the fixed term by using a Section 21, they could go for Section 8, Ground 2 which allows two months notice to be given that can ask the tenant to leave even during the fixed term.

chappers

The mortgagee is not reclaiming possesion though, the property is in the hands of the receiver, strange as it may seem, even though appointed by the lender, they are acting on behalf of the LL, it is not up to the lender what happens to the property it is upto the receiver, they must recognise the tenancy and can only dispose of the property at the end of the tenacy.

To the OP you are correct the bank cannot sell it, nor can the LL without permission from the receiver, however have you spoken to the receiver about their intentions at the end of your tenancy, they may be willing to sell to you.

franklee

chappers wrote: »

The mortgagee is not reclaiming possesion though, the property is in the hands of the receiver, strange as it may seem, even though appointed by the lender, they are acting on behalf of the LL, it is not up to the lender what happens to the property it is upto the receiver, they must recognise the tenancy and can only dispose of the property at the end of the tenacy.

To the OP you are correct the bank cannot sell it, nor can the LL without permission from the receiver, however have you spoken to the receiver about their intentions at the end of your tenancy, they may be willing to sell to you.

How do you know the mortgagee is not reclaiming possession? The OP says the bank can't sell it either as it hasn't been fully repossessed! which sounds to me like a repossession is underway but not complete. Also can you back up with reasons why you say the lender is excluded from repossessing and why the tenancy must run to the end, end of what do you mean, end of the fixed term? What stops the lender repossessing and using ground 8 section 2 if they want to end the tennacy before the fixed term ends? (Nothing IMO, it still brings a recognised tenancy to an end before the fixed term ends).

chappers

franklee wrote: »

How do you know the mortgagee is not reclaiming possession? QUOTE]

Because he has put it in the hands of the receiver.

The lender could only have used section 8 if they had gone to court for a repossesion.

I suggest you read up on the roles of LPA receivers.

Basically when a property is put in the hands of the receivers then they are in control f the property, they must recognise a valid tenancy and can collect the rent.
Once the tenancy is brought to a legally satisfactory conclusion, they are then free to dispose of the property, they then return the proceeds to the lender less their fees and expenses(most of which are laid down in the LPA).
BTL lenders use this as a way of getting their money back on defaulted mortgages without going to court and having borrowers string the process out, as most BTL mortgage agreements state the right to appoint a receiver once the terms of the mortgage have been broken.

franklee

chappers wrote: »

franklee wrote: »

How do you know the mortgagee is not reclaiming possession?

Because he has put it in the hands of the receiver.

The lender could only have used section 8 if they had gone to court for a repossesion.

I suggest you read up on the roles of LPA receivers.

Basically when a property is put in the hands of the receivers then they are in control f the property, they must recognise a valid tenancy and can collect the rent.
Once the tenancy is brought to a legally satisfactory conclusion, they are then free to dispose of the property, they then return the proceeds to the lender less their fees and expenses(most of which are laid down in the LPA).
BTL lenders use this as a way of getting their money back on defaulted mortgages without going to court and having borrowers string the process out, as most BTL mortgage agreements state the right to appoint a receiver once the terms of the mortgage have been broken.

Well I thought the LPA receiver "stands in the shoes" of the landlord and could therefore serve any notices the landlord could serve. But you say they are excluded from serving Section 8 notices. Interesting, do you have a link to that?

chappers

franklee wrote: »

chappers wrote: »

Well I thought the LPA receiver "stands in the shoes" of the landlord and could therefore serve any notices the landlord could serve. But you say they are excluded from serving Section 8 notices. Interesting, do you have a link to that?

They do in effect stand in the shoes of the LL, they are not excluded from serving section 8 notices but cannot use ground 2 as the lender is not seeking repossesion, but has instead chosen to appoint a reciever.
They can either seek possesion through the courts or exercise their rights through the mortgage agreement and appoint a receiver, provided the right to appoint a receiver is part of the mortgage agreement.