Holiday Let Blues

Comms69

anders170 wrote: »

I already have one small holiday let which last year grossed £23k (90% bookings as it's in a very popular location with a sea view). I bought it as a wreck in 2015, renovated it a cost of £85,000 in loans which has/will absorbed any tax - and I am a lone parent/sole trader of a cleaning company. This one is double the size, but I was expecting a similar revenue to my current one as the bigger one is in a residential area 10 mins walk to the sea, with no nice views.
Ive just called a property negligence lawyer who was really helpful and said I should talk to the solicitor's negligence department first and see what they say and then proceed. Im just really disappointed with the solicitor. How could I have researched what was listed on some deeds. Even the seller didnt mention the restrictions when she was given her questionaire otherwise I would have flagged it up. When I spoke to her today, she still didnt know! Now she will have to put her house back to market.

Do you actually make any profit from the house though? Can you share a link to the current one and the new one?

AdrianC

anders170 wrote: »

My question now though is what can I do now?

Chalk it up to experience.

My solicitor is currently saying I have to take out an indemity policy, Im saying that isnt an option.

You're right. As G_M says, all that an indemnity will do is cover any legal costs surrounding enforcement of the covenant.

I want to opt out of the purchase but I dont feel I should be the one to pick up the tab for this error

Tough.

if the covenant had been spotted at the outset I would have walked away then, not after spending my life savings on commercial valuations and legal fees etc. They're saying if I pull out then I will have made that decision, and therefore still be responsible for the legal and brokers fees/loan arrangement fee etc

Yup.

It's all a question of simply what order to do things in. If you'd done all the legals before finding you couldn't finance it, you'd be miffed. £3 and a quick look at the LR entry yourself would have spotted this before you'd even put the offer in.

You should be thanking the solicitor for stopping you making a bad purchase, not considering taking legal action against them for doing their job. They're not the ones who put this covenant in place.

What's the broker's role in all this? Finance/mortgage broker? Then they're not to blame, either. If they're a property finder, and you'd briefed them that you wanted a holiday let, then you might have a case that they shouldn't be charging you their fee, but beyond that...

00ec25

anders170 wrote: »

I already have one small holiday let which last year grossed £23k (90% bookings as it's in a very popular location with a sea view). I bought it as a wreck in 2015, renovated it a cost of £85,000 in loans which has/will absorbed any tax - and I am a lone parent/sole trader of a cleaning company. This one is double the size, but I was expecting a similar revenue to my current one as the bigger one is in a residential area 10 mins walk to the sea, with no nice views.
Ive just called a property negligence lawyer who was really helpful and said I should talk to the solicitor's negligence department first and see what they say and then proceed. Im just really disappointed with the solicitor. How could I have researched what was listed on some deeds. Even the seller didnt mention the restrictions when she was given her questionaire otherwise I would have flagged it up. When I spoke to her today, she still didnt know! Now she will have to put her house back to market.

OK so you are more experienced that your first post implies (although why you expect a sympathy vote for the irrelevance of being a lone parent is another matter)

please separate out "the broker" and "the solicitor"

from your first post I read it that the broker had recommended a property to you which the solicitor has now flagged up as having a restrictive covenant

on that basis the solicitor has not been negligent. In reality they have done exactly what you paid them for, they have read the deeds and given you advice. The covenant is in the deeds so no one will know about it until the deeds are read . So I'm with the solicitor on this one, I still think you would be a risk taking fool to buy and then rely on an indemnity, but at the same time I do not think the solicitor has been negligent, quite the reverse. the solicitor has done an excellent job flagging up the key issue

I am however totally foggy as to the role of "the broker" and what the extent of their involvement was in selecting/recommending the property to you for consideration.

anders170

I found the property. The broker has arranged a loan for the deposit from Together, and a mortgage from Principality. She wanted £2k from me for that, to be added to the loan. She stated that she would deal with the running between of things, such as liaising with the solicitor, in fact yesterday was the first time I had spoken to her. The broker wanted sole charge so that nothing could go wrong. What seems to have gone wrong is that the broker instructed an administrator under her employment to complete some paperwork which she failed to check, and which somehow had a box marked BUY TO LET ticked. This went to the solicitor, who only last night told me this. It was ME who found the restrictive covenant - the solicitor had seen it but as she thought it was a BTL mortgage, it didnt occur to her that it would be a problem. The borker should have checked the paperwork and liaised accordingly/regularly with the solicitor. The solicitor should have smelt a slight rat when the Principality mortgage offer arrived 8 weeks ago, labelled "HOLIDAY LET MORTGAGE", but didnt remark on it.
As far as the lone parent comment, I was simply explaining why I receive tax credits (as I have young twins).

AdrianC

So you originally sourced the property? It wasn't found for you?

You didn't directly explain to your solicitor your specific - and unusual - requirements for the property, just relied on them picking up a clue from one aspect of the paperwork sent by another party completely?

Thrugelmir

anders170 wrote: »

The solicitor should have smelt a slight rat when the Principality mortgage offer arrived 8 weeks ago, labelled "HOLIDAY LET MORTGAGE", but didnt remark on it.

Your solicitor is no doubt dealing with a number of matters concurrently. When buying any property to let. The expectation would be that this issue would have been clarified at the outset by the purchaser. Before even sourcing finance.

AdrianC

Hold on one moment... A loan from Together (aren't they a sub-prime lender?) for the DEPOSIT? Do the mortgage lender know about that? Can't see them being terribly thrilled...

kingstreet

Brokers' Union view.

It appears the broker arranged the correct Holiday Let finance and it has later come to light that the property can't be let on that basis.

The error by the administrator has caused the issue to come to light later in the process because the solicitor thought it was a standard BTL, but the issue was there nonetheless.

Frankly, I would not accept having to find out how a property can be let and would take my client's instructions on applying for the right finance, which the broker appears to have done.

I'd expect my client to liaise with the solicitor on the legal aspects of the property purchase.

kingstreet

anders170 wrote: »

Does anyone hav any idea where I can find someone to sue the broker

A complaint, clearly set out and explaining what outcome you expect to resolve the matter is all that's needed.

You aren't heading for the Old Bailey just yet. Yes, I know the Old Bailey is the Central Criminal Court, it was just a joke...

mchale

anders170 wrote: »

Hi,could help with suggestions? Thanks

Always always find your own solicitor, never be recommended to a firm by someone with a vested interest