Flat repossession

TLP2012

Hi everyone

My flat's repossession hearing was today - I am the tenant, the LL hasn't been paying the mortgage. The mortgage is Buy to Let and we renewed in early June for a year. I was advised by Shelter that unless there was some clause in the terms and conditions stating otherwise, it would be likely that the lender would have to honour the tenancy agreement, ie let us stay until next June. The judge told me this is not the case. She ruled that the repo order would come into effect 28 days from today and we'd be on 2 months' notice from then, so we have 3 months to leave basically. Does this sound right?

I did mention that we would consider buying the property, however it was stated that the mortgage balance is £310K. Does that mean that the lender could only sell the flat at minimum 310k to recoup the cost?? This would not align to what similar flats are going for in the area so I was surprised and put off by this. I didn't feel it was really the time or place to ask during the hearing!

Hope someone can help!
Thanks

princeofpounds

The lender might be prepared to sell for less, although they would prefer not to. A lot will depend on the carrying value of the property on their books (you won't find this out by the way). If they have already marked down a loss on the loan then they might be more flexible. If not, they might want to 'hide' the loss for some time before selling and crystallising it.

I can't comment on what the judge said. Normally I would agree with Shelter on this. What you can do about it depends on whether the judge was just mistaken, or if there is some technicality that applies. Do you have any more detail?

TLP2012

The judge, the claimant (lender) and the duty advisor didn't seem to know anything about BTL mortgages and the rights of tenants. The judge asked the claimant what she knew about it and she said she didn't know anything. So the judge pulled out a big law book and sat reading it for 15 minutes. The problem is, our rent doesn't cover the mortgage. So they want us out quickly. Just to clarify, if the market for flats in this area of a similar type are going for less than the balance or the carrying value, then you think they might not sell until the market picks up?

Thanks for your reply.

It_can_get_better

You might want to have a read of Council of mortgage lenders guidance on BTL arrears.

http://www.cml.org.uk/cml/policy/guidance?keyword=&key_area=0&date=0&page=2

Here's the direct link to the guidance pdf.

http://www.cml.org.uk/cml/filegrab/Industryguidanceonbuy-to-letarrearsandpossessions.pdf?ref=6441

FBaby

So why are BTL rates higher than non commercial ones if the lenders can do whatever they want to repossess a property. Surely they can't have their cake and it...what am I writing, of course they can, they are bankers.....

TLP2012

Thanks It Can Get Better. The bit that applies to me is ...If the tenancy was created after the loan was entered into but was consented to by the lender, on possession the lender will take the property subject to the terms of the tenancy. Generally the
terms and conditions of a buy to let loan will include consent to tenancies. Provided those terms and conditions are complied with the tenancy will be treated as having consent from the lender. This
means that the majority of tenancies in buy to let lending have consent and are binding. Should the lender wish to obtain vacant possession in these circumstances the lender will have to do so in
accordance with the legislation governing the relevant tenancy.

So I should be able to stay until next June? The bit I am not sure of is the last sentence about the legislation governing the relevant tenancy. Regardless of the fact that the rent doesn't cover the mortgage, surely they can't just kick me out? This is so stressful.

Now the letting agent has removed my deposit from the scheme, told me weeks ago that it would be covered and I've since found out that it is sitting in their bank account! They told me today that it would be more hassle to get it out of a scheme than to get it back off them when we leave and we should trust them! Are they having a giraffe???!? The deposit is covered until end of August by the original scheme even though it's not actually 'in' there anymore but still! The whole situation goes from bad to worse. They told me not to pay rent from now on - which makes me think that's how they'll keep hold of the deposit which is £500 more than my rent! Again. As if.

SouthCoast

Suggest that you discuss the various issues with Shelter.

TLP2012

Update for anyone interested, or who might be in a similar position.

I called Shelter who have advised me that as it's BTL, if Ground 2 of the Housing Act 1988 is NOT mentioned in my tenancy agreement, then it would become binding on the lender therefore they would have to honour the agreement and allow us to stay until next June. Sadly it is mentioned in my tenancy agreement so the lender is within its rights to get us out after 2 months after all.

I am going to threaten court action on the letting agent who appear to be making a fast buck out of the situation by keeping hold of our deposit.

G_M

I agree that the judge seems to have got this wong.

The mortgage lender consented to the tenancy.
Therefore, when they repossess the property, they become your new landlord, and the terms of the existing tenancy agreement remain in place (ie fixed until next June unless there is a break clause).

You need professional advice (yes, try Shelter, CAB, or a local law centre, or a property solicitor) in order to appeal against the decision.

It_can_get_better

It does seem strange. From what you've written i gather the judge has awarded possession to the mortgage lender, and that will come into effect in 28 days. But at the same time the judge has given you 2 months notice effective after the 28 days.

You've got a tenancy which is still valid and the lender will have consented to. The only way the lender can evict you in the fixed term (assuming you don't break any tenancy terms) is using a prior notice ground, in this case ground 2. Unless the judge has dispensed with the need to serve notice on the tenant, which they are allowed to do. So even if there was no clause in the tenancy, the court could still award possession anyway.