buy to let warning

ptwparkinson

Anyone out there buying to let --- be careful of any properties which are bought leasehold which have ground rents .
I received 2 invoices last week -- one from the mortgage company and one from the agent of the landlord who holds the lease .
One of the invoices goes back to 2004 which is when I bought the property and they are holding me to account for the ground rent that was due the 5 years before I bought plus they are charging for mortgage registration fees of 72.00 and registration fees for transfer of 72.00 --- spoke with my solicitor today and he says that due diligence would have been carried out at the time of purchase and all of this should have been covered then --- and the reason why there are arrears for ground rent is because the invoices have been sent to the buy to let property and tenants just bin them .
Same with the other property --- these arrears go back to 2008 and invoices were sent to the buy to let property and they are demanding £ 54.00 for ground rent arrears .
I have told them that I don`t mind paying the ground rent for the years that we have owned the properties but I do not want to be paying the other fees .
Anyway -- my solicitor will pull the files out of the archives and check everything --- my advice is that if you buy a leasehold property just be aware of this and :
send your own letter to the leaseholder giving them your correspondence address
and check that your solicitor has allowed for transfer fees , mortgage registration fees and land registry fee that should be paid over to the leaseholder but also clear it with your solicitor
The other thing to bear in mind is that if you have not been paying the ground rents I think that the leaseholder could in some circumstances actually re-possess the property !!!

Pixie5740

This is your second warning post about BTL. In your case would it really be so bad if the leaseholder took possession of your property?

ptwparkinson

can you explain you comment please --- yes it would be quite bad because I would probably still owe £ 15,000 on the mortgage

Pixie5740

You're in negative equity, your properties have been sitting empty for 2 years, when you did have tenants they were in arrears with no hope of you getting the owed rent through the small claims court, you've had boilers, whole central heating systems and copper piping stolen so many times you can't get insurance. You are losing money had over first so having the properties taken off your hands with you only owing the mortgage company £15,000 is probably quite a good deal for you.

ptwparkinson

20 properties if I sold the ones in these areas --- 20 x 15,000 = 300,000 -- not so good is it !!! and mainly because of twerks on benefits who steal the rents and everything else and get away with it

Pixie5740

Or because of a twerk who put all his/her eggs in one basket.

The rental market you went for was high risk but better reward if it panned out. It hasn't so now you have to decide whether to cut your losses or keep flushing money down the toilet.

eddddy

Hi ptwparkinson

Back to your original question... As you suggest, you solicitor should have checked for outstanding ground rent, service charges etc when you bought the property. It's a standard part of the leasehold buying process.

You should ask your solicitor why he/she didn't do that.

(Or perhaps you missed your solicitor's warnings about the unpaid ground rent, or something similar.)

AdrianC

ptwparkinson wrote: »

20 properties if I sold the ones in these areas --- 20 x 15,000 = 300,000 -- not so good is it !!! and mainly because of twerks on benefits who steal the rents and everything else and get away with it

F'k me backwards. You have TWENTY BtL properties, yet such basics as tenant referencing, ground rent and council tax are still coming as a surprise to you?

How have you not ended up bankrupt yet?

harrys_dad

AdrianC wrote: »

F'k me backwards. You have TWENTY BtL properties, yet such basics as tenant referencing, ground rent and council tax are still coming as a surprise to you?

How have you not ended up bankrupt yet?

He has negative equity of £300,000 so he is bankrupt. One wonders if he initially invested any money at all, because at the time he seems to have bought the 125% of rent and 75% LTV did not seem to be enforced. If he did put his own money in that has gone too. I wonder if all the mortgages are with Northern Rock. Still, there is a safety net, he could become "a twerk on benefits" and rent what used to be one of his own houses, and "steal his rent".

AdrianC

harrys_dad wrote: »

He has negative equity of £300,000 so he is bankrupt.

Only if the banks ever decide to call the mortgages in.

There's a strong argument for "trading whilst insolvent", though.

ptwparkinson

No I didn`t put all my eggs in one basket .I do have properties in other areas which are not in negative equity . I put in £ 150,000 of my own money . My mortgages were usually 85% on interest only . No council tax is not a shock but the ways in which they have increased by 50 % if empty for 2 years is a downright insult . Ground rent is not a shock -- you should read the post properly -- it`s a shock when they start asking for it all of this time down the line because they have been sending invoices to the BTL properties and I don`t see why I should be paying their fees when it is their mistake -- ground rent at £ 3.00 per year is not a shock !!! And to Harry`s dad ---- what do mean by suggesting I should steal rent if I was on benefits --- if I did end up on benefits which is possible there is no way that I will steal the housing benefits --- it would always be paid on time and I wouldn`t be painting bedrooms purple and black and allowing my dog to defecate all over the inside of the house . I am an honest person and I take enormous offence at what Harry`s dad has said .