Is voluntary surrender an option?

Scotsgirl74 · 15 January 2020 at 8:44PM

Hi. I own a flat which I bought in 2007 before the market crashed. It’s on an interest only mortgage and in negative equity. My family and I moved out in 2013 and we bought a new house. Since the. I have rented it out. This morning the estate agent received the keys back through the post, the tenants having moved out. This is the third time this has happened to me. I can’t afford to pay mortgage payments for the flat without rent. It’s been a noose around my neck. It costs me money every month to rent it out with the mortgage, insurance and boiler cover. I have a bad credit rating and no savings. I can’t afford to pay for a new tenant find and to be honest renting it out causes me a great deal of stress. I’ve been reading about voluntary surrender. Is this the way to go -
I’m unable to sell as there will be a shortfall of circa £25k. My next mortgage payment is due at the end of the month. I’m worried that anything I do will affect our home. Please help

G_M · 15 January 2020 at 8:53PM

You can discuss voluntary surrender, but it's likely that if the lender agrees, you'll still owe them the shorfall - just as a loan instead of secured against the property.

But if you are about to default on repayments, as it sounds like, then speaking to the lender is best. Burying head in sand never works, and the sooner the better.

This morning the estate agent received the keys back through the post, the tenants having moved out.

Did they serve notice? Or was it the end of the fixed term? Or did they just leave....

Do you know where they went? Pursuing them for rent is an option (depending on circumstances), as is keeping ther deposit.

Scotsgirl74 · 15 January 2020 at 9:12PM

No notice served and was t the end of their term. Was a rolling contract so their deposit will be kept. That’s not really the issue though. The issue is I have an empty flat again and tenants keep disappearing either without paying rent or leaving with no notice and I can’t afford to pay mortgages on 2 properties

G_M · 15 January 2020 at 9:23PM

Scotsgirl74 wrote: »

No notice served and was t the end of their term. Was a rolling contract so their deposit will be kept.

Can't be both! Either it was the end of their (fixed) term, or it was a periodic (rolling) tenancy, requiring notice.

Does the deposit cover the full rent for the missing notice, which would be somewhere between one and two months probably. If not, you can sue.

That’s not really the issue though.

Except that every £ you can reclaim helps with the mortgage issue!

The issue is I have an empty flat again and tenants keep disappearing either without paying rent or leaving with no notice and I can’t afford to pay mortgages on 2 properties

But you're right - the issue can only be resolved in cooperation with the lender, or by finding enough funds elsewhere to pay the motgage.

Scotsgirl74 · 15 January 2020 at 9:26PM

It was a rolling contract Above should have said wasn’t the end of heir term. Rent will cover one month but should have been 2 months notice

davidmcn · 15 January 2020 at 10:33PM

Voluntary surrender financially works in the same way as an involuntary repossession. If the lender doesn't get enough to cover what you owe, then you'll still owe them the shortfall.

The other option would be to discuss with the lender whether they'd accept whatever you can get from a "normal" sale - again you'd still owe them the shortfall, but the additional costs charged by the lender should be less, and it's likely to get a better price than being sold as a repossession. There's no obligation on lenders to go along with that, but if the alternative is a voluntary surrender then they might prefer it.

maninthestreet · 15 January 2020 at 10:40PM

Have you had the property valued recently to confirm it's value?

Scotsgirl74 · 15 January 2020 at 11:21PM

I haven’t but other flats in the street are going between £40 and £50k and I owe £72k

markin · 15 January 2020 at 11:35PM

How about a Re-mortgage on your home to cover the loss when you sell, Or asking for a break on your Home mortgage payment to get ahead and help to cover the next couple of voids.

diggingdude · 15 January 2020 at 11:48PM

im always amazed when people buy a second house when in this situation. Massive risk. Do you have equity in current property you could utilise?

yksi · 16 January 2020 at 10:38AM

If you decide to keep it, change agents. The agent you're with seems to be choosing rubbish tenants - is it possible they aren't credit checking applicants? And get someone who'll require 12 month leases, plus you can specify the types of tenants you don't want - yes, discrimination is allowed so long as nobody puts it into writing or tells the unsuccessful applicants.

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Is voluntary surrender an option?

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