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    • Scotsgirl74
    • By Scotsgirl74 15th Jan 20, 7:44 PM
    • 20Posts
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    Scotsgirl74
    Is voluntary surrender an option?
    • #1
    • 15th Jan 20, 7:44 PM
    Is voluntary surrender an option? 15th Jan 20 at 7:44 PM
    Hi. I own a flat which I bought in 2007 before the market crashed. Itís 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 canít afford to pay mortgage payments for the flat without rent. Itís 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 canít afford to pay for a new tenant find and to be honest renting it out causes me a great deal of stress. Iíve been reading about voluntary surrender. Is this the way to go -
    Iím unable to sell as there will be a shortfall of circa £25k. My next mortgage payment is due at the end of the month. Iím worried that anything I do will affect our home. Please help
Page 1
    • G_M
    • By G_M 15th Jan 20, 7:53 PM
    • 51,171 Posts
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    G_M
    • #2
    • 15th Jan 20, 7:53 PM
    • #2
    • 15th Jan 20, 7:53 PM
    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.
    ** If I include a blue link in my post, click and read it before posting a follow-up question. The answer may be in the link! **
    • Scotsgirl74
    • By Scotsgirl74 15th Jan 20, 8:12 PM
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    Scotsgirl74
    • #3
    • 15th Jan 20, 8:12 PM
    • #3
    • 15th Jan 20, 8:12 PM
    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
    • By G_M 15th Jan 20, 8:23 PM
    • 51,171 Posts
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    G_M
    • #4
    • 15th Jan 20, 8:23 PM
    • #4
    • 15th Jan 20, 8:23 PM
    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.



    Thatís 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 canít afford to pay mortgages on 2 properties
    Originally posted by Scotsgirl74
    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.
    ** If I include a blue link in my post, click and read it before posting a follow-up question. The answer may be in the link! **
    • Scotsgirl74
    • By Scotsgirl74 15th Jan 20, 8:26 PM
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    Scotsgirl74
    • #5
    • 15th Jan 20, 8:26 PM
    • #5
    • 15th Jan 20, 8:26 PM
    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
    • By davidmcn 15th Jan 20, 9:33 PM
    • 14,414 Posts
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    davidmcn
    • #6
    • 15th Jan 20, 9:33 PM
    • #6
    • 15th Jan 20, 9:33 PM
    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.
    Last edited by davidmcn; 15-01-2020 at 9:47 PM.
    • maninthestreet
    • By maninthestreet 15th Jan 20, 9:40 PM
    • 15,371 Posts
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    maninthestreet
    • #7
    • 15th Jan 20, 9:40 PM
    • #7
    • 15th Jan 20, 9:40 PM
    Have you had the property valued recently to confirm it's value?
    "You were only supposed to blow the bl**dy doors off!!"
    • Scotsgirl74
    • By Scotsgirl74 15th Jan 20, 10:21 PM
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    Scotsgirl74
    • #8
    • 15th Jan 20, 10:21 PM
    • #8
    • 15th Jan 20, 10:21 PM
    I haven’t but other flats in the street are going between £40 and £50k and I owe £72k
    • markin
    • By markin 15th Jan 20, 10:35 PM
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    markin
    • #9
    • 15th Jan 20, 10:35 PM
    • #9
    • 15th Jan 20, 10:35 PM
    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
    • By diggingdude 15th Jan 20, 10:48 PM
    • 1,475 Posts
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    diggingdude
    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?
    House owner as of 27.3.2019
    • yksi
    • By yksi 16th Jan 20, 9:38 AM
    • 194 Posts
    • 333 Thanks
    yksi
    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.
    £3 a Day January £61/93
    £2020 in 2020 £61/2020
    • Lover of Lycra
    • By Lover of Lycra 16th Jan 20, 10:08 AM
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    Lover of Lycra
    OP, are you in Scotland as your user name might suggest? If so there is no minimum term or fixed term for tenancies that's started from 1st December 2017 onwards.
    • Lover of Lycra
    • By Lover of Lycra 16th Jan 20, 10:10 AM
    • 833 Posts
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    Lover of Lycra
    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.
    Originally posted by yksi
    What calibre of tenant do you expect is renting properties valued at £40k to £50k in an area where house prices fell during the 2008 recession and still haven't recovered?
    • yksi
    • By yksi 16th Jan 20, 11:15 AM
    • 194 Posts
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    yksi
    What calibre of tenant do you expect is renting properties valued at £40k to £50k in an area where house prices fell during the 2008 recession and still haven't recovered?
    Originally posted by Lover of Lycra
    I'd personally still prefer not to have tenants who'd only recently arrived from overseas, tenants without a job and tenants with pets. Working people do exist in lower priced areas.
    £3 a Day January £61/93
    £2020 in 2020 £61/2020
    • foxy-stoat
    • By foxy-stoat 16th Jan 20, 11:19 AM
    • 5,731 Posts
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    foxy-stoat
    I would sell it now and try and finance the shortfall using equity in your current property, or some other way.

    How many years left on the interest only mortgage and do you expect the flat to be worth more when the mortgage is due to be paid in full?

    You will have to sell it anyway, unless you had a repayment vehicle when you took out the IOM.
    • silvercar
    • By silvercar 16th Jan 20, 12:14 PM
    • 39,806 Posts
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    silvercar
    Difficult situation because selling up just crystallises your losses. Keep on going and you could eventually see a time when the property is worth what you paid.

    Getting better tenants is one solution. Decent hard working people on low incomes do want to rent, as to those on higher incomes saving for deposits to buy. Change agents and get a better tenant. Alternatively, find out whether the LHA in your area would cover the rent and find a decent single parent who wants to make the property her/his home for a long time.
    • seradane
    • By seradane 16th Jan 20, 12:36 PM
    • 48 Posts
    • 46 Thanks
    seradane
    Difficult situation because selling up just crystallises your losses. Keep on going and you could eventually see a time when the property is worth what you paid.
    Originally posted by silvercar
    But selling up could also stem further losses... (sunk cost fallacy and all that...)
    • babyblade41
    • By babyblade41 16th Jan 20, 12:37 PM
    • 1,695 Posts
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    babyblade41
    Agree with silvercar above.

    You need to carry on and make a determined effort to get it rented to a suitable tenant. Not sure about your LHA but ours will take over and cover rent for a tenant and be responsible for that tenant.

    If you sell at a loss you are still liable for the shortfall so my advice is see if you can come to some arrangement with the mortgage company for some breathing spavce and get the property rented .

    Does it need some freshening up to make it more appealing, I would imagine a good weekend cleaning and re-painting might work wonders
    • Scotsgirl74
    • By Scotsgirl74 16th Jan 20, 1:27 PM
    • 20 Posts
    • 6 Thanks
    Scotsgirl74
    I paint it every time it is rented out. The flat is in a decent area and was rented to a working couple with children. House prices in Scotland are lower. I have 14 years left on the mortgage. I do have equity I my current home but I don’t have a good credit rating. I really don’t want to rent it out any more. It cost me money every month to do so which means I’m out of pocket each month. I’m going to give mortgage company a call. Last resort will be handing the keys back. Renting it out again is not an option for me any more
    • babyblade41
    • By babyblade41 16th Jan 20, 1:31 PM
    • 1,695 Posts
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    babyblade41
    I paint it every time it is rented out. The flat is in a decent area and was rented to a working couple with children. House prices in Scotland are lower. I have 14 years left on the mortgage. I do have equity I my current home but I donít have a good credit rating. I really donít want to rent it out any more. It cost me money every month to do so which means Iím out of pocket each month. Iím going to give mortgage company a call. Last resort will be handing the keys back. Renting it out again is not an option for me any more
    Originally posted by Scotsgirl74
    It does sound you have made up your mind ... I was a landlord for many years without mortgages and it was still a tough time on occasions.
    Your Mortgage company will give you the right information and best way forward , but you will still owe the full amount whatever you sell the property for ..it won't be just wiped off.

    You may have to think about a re-mortgage on your own property to cover the short fall
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