Landlord in Arrears

jcartlidge

A bit of help/adivce needed here.

Over the weekend it has come to light that my landlord is considerably in arrears with his mortgage on the property i am renting. I believe this to be at the stage when the mortgagee is ready to file proceedings agaisnt him.

Where does this stand me legally? I am 6 months into a 12 month let. Is it possible that the mortgagee will look to evict me during my tenancy? What rights do i have?

silvercar

If the home is repossessed then you could find yourself evicted by the mortgage lender.

There are some people who think that if your landlord had the correct mortgage (BTL or similar) then you would become a tenant of the lender, personally I don't see this making much of a difference. If a landlord doesn't keep up repayments then the property is at risk of being repossessed.

It may be worth contacting the lender and letting them know you are a tenant in the property. You at least would then be kept in the picture. It may be that you could pay the lender the rent money direct and stave off repossession.

In practice, repossession takes a long time, a court case would only be the first step. If the landlord made a case to the jusge for repaying the arrears, chances are he would be given some time to sort things out.

If the worst happened, you could in theory sue the landlord for breach of (the AST) contract. In practice, if he has no money to pay the mortgage, chances are he is broke and you wouldn't gain anything.

Guy_Montag

Watch out that you don't lose your deposit!! Part of me says stop paying rent - the LL's f'ked anyway, pay it into a different account so that you can settle with however ends up with the place. Get in touch with Shelter or the CAB & see what they say - then post back here to let us know so we can pass it on to the (probably many) people who will be in your position in the near future.

I think the difference between a LL having a BTL mortgage & a normal one is that the lender can evict you on taking possession (i.e. immediately on repossession: hello bailiffs, goodbye home), rather than having to separately evict you after taking possession - giving you a month or two to find new accommodation.

Good luck.

jcartlidge

Thanks for the advice guys.

We let the property through a letting agent so pay rent to them directly and they hold the deposit so that is safe. In fact the landlord request that we sign over the deposit to him only a few months ago, glad common sense prevailed and i said no.

Will post to keep the forum up to date with what happens, out of interest why do you feel this will occur more in the coming months? The rising interest rates or do you feel the credit bubble is about to burst for a large majority?

Guy_Montag

I think rising rates are going to have a big effect - if a LL is not making much money, or worse losing money already, it's just going to get worse before it gets better. We're likely to see IR's rising by about 10% (5.25->5.75%) in the next month or three, I guess that corresponds to perhaps a 7.5% (6.5->7%) increase in an I/O mortgage.

Round here yields are very low to begin with (as low as 3.5%) & there's plenty of places available to rent (mostly "executive" flats though).

mystic_trev

Most newbie BTL Landlords (past couple of years) are already in "negative gearing" i.e. subsidising their tenants! Another IR rise and many more will be totally bugg*red.

irnbru_2

jcartlidge wrote:

We let the property through a letting agent so pay rent to them directly

Then your contract is with the letting agent not the LL. If you were evicted w/o notice then it is the LA from whom you'ld seek recompense.

thesaint

The lender would have to go through the same process as anyone else if they were to repossess the property.

Contacting the company asking to be kept in the picture would not work as they have confidetiality to their client(Your landlord). Paying the lender directly would also be a non starter for obvious reasons.

Witholding the rent is the worst thing you could do in this situation, breaking a contract could see you in court, especially if the landlord needs the money to pay his mortgage.

A letting agent seeks their instruction from the landlord, so you would need to take the landlord to court, seeking recompense from the letting agent would be a waste of money.

In light of the situation you find yourself in, I would advise you to contact shelter for advice, but any eviction is months away.

Start looking for an alternative property a.s.a.p.

RabbitMad

irnbru wrote: »

Then your contract is with the letting agent not the LL. If you were evicted w/o notice then it is the LA from whom you'ld seek recompense.

I think irnbru is probably wrong. Without seeing your contract I can't be certain but it is most likely that your contract is with the LL and that the LA is just that - an agent.

The contract I have with my tenants is quite clear on that and on who's responsibility is who's. (i.e. they must pay the LA the rent, but contact me for everything else - problems etc). Therefore any recompense will have to come from the LL (which you might think is very unlikely).

Maybe you should consider withholding your rent?

Guy_Montag

Having seen that the deposit is being safely kept by the agent, I would continue paying rent, the most you'll lose is, at worst, one month's rent, but most likely nothing.

Though thesaint may be right about client confidentiality, it might still be worth calling up the lender to see if they can shed any light on the situation. At worst they'll tell you they can't say anything. I'd also call the landlord and letting agent to ask them to keep me in the picture.

BobProperty

We discussed this a few months back. If the mortgage holder is going for repossession you will get a letter from the court addressed to "The Occupier" notifying you of the proceedings. If they get possession they will have to get bailiffs to remove you, but the most I would see a court doing would be giving you time to get out. Even then, they may take a dim view of your situation if you didn't do anything about the notice of the hearing.