Freeholder asked for references

jones_guitar

Hi, I am buying a buy-to-let. There is nothing preventative in the lease, and the estate agent never disclosed I was buy-to-let to the seller.

The freeholder asked for two references and the mortgage offer to complete paperwork.

I think the freeholder assumes I'm going to live there.

Anyone ever heard of this? My solicitor questioned it, said nowhere is the lease is this a requirement.

I think they are worried I'll be a difficult personality. The estate agent didn't say anything of me being BTL to the seller because of personal attachment to the flat, the sellers mum died...

silvercar

Sounds like the seller has a personal attachment to the property. Personal references are easy, just get a friend to write something flowery and suitable. Will the mortgage offer reveal it’s a BTL? Would your solicitor right a letter to say they have seen the mortgage offer, but their client (you) doesn’t want to pass on its details?

A friend has a similar situation, they delayed putting in the planning permission to demolish and rebuild until after exchange. The seller was annoyed, but little they could do after exchange.

eddddy

This is probably because the lease says that the current leaseholder must get a "Licence to Assign", and part of the process requires a buyer to provide references.

i.e. The freeholder has to give consent for the flat to be assigned (sold) to you.

The purpose of the references is generally to ensure the prospective buyer is financially capable of paying future service charges, ground rent, and complying with the lease.

So, in theory, the freeholder might take this very seriously and ask for references from

• Your bank
• Your accountant
• Your employer

Or the freeholder might just be 'going through the motions' because that's what the lease says, and they don't really care what the references say.

(In theory, you could say that a freeholder getting proper references is a good thing, because it means you're less likely to have neighbours who can't pay their service charges - meaning that the block falls into disrepair.)

jones_guitar said

I think they are worried I'll be a difficult personality. The estate agent didn't say anything of me being BTL to the seller because of personal attachment to the flat, the sellers mum died...

As I say, it will be a requirement in the lease. If it's not stated in the lease, the Freeholder can't 'invent' requirements for references etc.

Presumably, you've checked the lease to see what the 'rules' are for renting out the flat.

jones_guitar

There is a licence to assign, buy apparently it isn't written I'm the lease. It is BTL therefore self-funding, including all service charges.

eddddy

jones_guitar said

There is a licence to assign, buy apparently it isn't written I'm the lease.

That doesn't really make sense.

If the lease doesn't say that a "Licence to Assign" is required, then why is somebody saying that a "Licence to Assign" is required, along with references? Where does that requirement come from?

(I'd have thought your solicitor would have spotted that anomaly.)

It is BTL therefore self-funding, including all service charges.

Maybe the flat rent will generate a surplus (profit), but maybe you need that surplus to pay off the loan on your yacht, or to pay your children's boarding school fees - so you won't have enough left over to pay your service charges.

Or maybe you need to demonstrate that you can still pay the service charge if…

• You can't get a tenant for a few months
• You get a tenant, but they stop paying rent - and it takes you 12 months to get them evicted (so you have no rental income for 12 months)

jones_guitar

Sorry, I need to clarify and be clear, there is a Licence to Assign, but the solicitor is saying there is no mention of references in the lease, which she has raised.

No restrictions letting in the lease.

eddddy

jones_guitar said

Sorry, I need to clarify and be clear, there is a Licence to Assign, but the solicitor is saying there is no mention of references in the lease, which she has raised.

I don't think the lease needs to mention references. Typically the lease would just say that the Freeholder needs to grant a Licence to Assign.

I don't think the lease would specify what process the Freeholder has to follow in deciding whether to grant a Licence.

But it would be helpful to know what type of references the freeholder is looking for - e.g. do they want a written reference from your bank, or your employer - or something much less formal. So maybe your solicitor can ask that question.

jones_guitar

I'm guessing she asked the question...

jones_guitar

Solicitor said there is a consent request, so lisence to assign is probably required. No requirement for references.