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Buy-to-let: Warning For 'accidental' Landlords


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Very true, Sour Mash - good point. I'm going to be moving in the next few months back from HK to Edinburgh, it will mean ending my tenancy in Oxford and starting a new one, my current landlord I know for a fact has an OO mortgage and looking at the deluge of Edinburgh rentals - there are good odds my new one will too - that will be my first line of 'leverage' if they dick me around....

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Isn't holding onto a depreciating asset rather like holding onto a toxic loan? ;)

Not if you bought pre-bubble. The income gives great profit on a tracker BTL mortgage and you do not need to sell for 15 to 20years (as is my case).

I have even put an aggressive cash offer in on a repo house last week. If I get it, it will return 9% even in these lower rent income times. Now that is something to smile about :lol:

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I'm sure that bothers them a lot. NOT!

It will when the tenant cottons on and demands a cut in rent in lieu of less eviction protection, else they'll call the mortgage company and dob them in

It's quite easy to tell what's going on as the letters continually drop through the letterbox from the landlords bank

:lol:

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House prices will start rising again when Labour's specially bred army of chavs from the single mums on benefit grow up and demand council housing, which will be provided by almost-broke BTL'ers.

All part of the plan to keep house prices high... the middle class can't have kids, they're too busy buying houses and chav mums can raise a lot more kids for a lot less money... they are far more efficient for the government's plans. ;)

Edited by DementedTuna
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They said BTLers would save the market, but they didn't

As the guy posting from the coal face showed earlier, banks don't want BTL custom and are being as ruthless as they would any other business loan, so they can perhaps show more compassion with residential mortgages

BTL will not survive this crash in the format everyone recognises it now

It will not be providing the council houses of the future, well not with the current owners. It will be reposessed first and flogged to LHAs

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"The only landlords who are going to make lets work over the next couple of years are those with a decent slab of equity in their property – around 40pc," says Liam Bailey, Knight Frank's head of residential research.

That statement is so asininely stupid that it boggles the mind. Ever heard of cost of capital? If you're seeing a zero or negative return on that 40pc equity, then your investment isn't working -- you're losing money. How do such idiots make it into the papers?

Is it not reasonable to assume that covering payments on a 60% LTV should be easily coverable by the rental income?

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You mean like a disenchanted tenant?

If you rent out without telling the lender then you are committing fraud. Additionally, chances are you aren't declaring the rent as income to the taxman either - tax evasion.

Better make sure you fix things that go wrong ASAP and don't dick the tenants around.

How the duck would the tenant know what type of mortgage you've got? I rented out a flat for five years to 3 seperate couples, I highly doubt that it even remotely occurred to any of them what type of mortgage I had.

I always treated my tenants fairly anyway.

As for fraud, get real man. Some things are serious and some are not. If my mortgage company had of found out they would probably just have upped the rate slightly. They're not interested in taking people to court, they're there to make money.

I fail to see how whether or not you are paying tax on the rent is related to your mortgage type.

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It will when the tenant cottons on and demands a cut in rent in lieu of less eviction protection, else they'll call the mortgage company and dob them in

It's quite easy to tell what's going on as the letters continually drop through the letterbox from the landlords bank :lol:

Mine didn't. I simply had then redirected to where I lived.

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How the duck would the tenant know what type of mortgage you've got? I rented out a flat for five years to 3 seperate couples, I highly doubt that it even remotely occurred to any of them what type of mortgage I had.

I always treated my tenants fairly anyway.

As for fraud, get real man. Some things are serious and some are not. If my mortgage company had of found out they would probably just have upped the rate slightly. They're not interested in taking people to court, they're there to make money.

I fail to see how whether or not you are paying tax on the rent is related to your mortgage type.

Two points:

First, tenant will know that the landlord is on an OO mortgage because correspondence will be sent from mortgagee to tenant's adress.

Second, owner's property insurance is void if not owner living there. Oops.

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Two points:

First, tenant will know that the landlord is on an OO mortgage because correspondence will be sent from mortgagee to tenant's adress.

Second, owner's property insurance is void if not owner living there. Oops.

Tenant will not know anything if mail is redirected. And even if it wasn't redirected, it's illegal to open somebody else's mail.

Buildings insurance was covered as part of my ground rent payments.

I can assure everybody on this thread that most tenants have no idea about this kind of stuff and most couldn't care less as long as they are treated fairly.

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when i got married in 03 i became an accidental landlord for a year as my wife wouldn't live in my part of london. it was a logistical nightmare in terms of mortgage, insurance, bills etc and i sold up as soon as i could (after moving back in for 6 months to do it up after my tenants moved out leaving it like a bomb site).

serves me right for landlordism i know but i never planned it that way. i suspect a lot of the mew accidentals will find it even more unrewarding than i did as at least house prices were rising during that time.

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You mean like a disenchanted tenant?

If you rent out without telling the lender then you are committing fraud.

I can't agree. You are in breach of the terms of your contract, sure, but not every contract breach is fraud. And I don't believe that this one is, because it has been brought about by a change of crcumstance, not dileberate intent

Additionally, chances are you aren't declaring the rent as income to the taxman either - tax evasion.

How can you possibly have the evidence to make that assertion.

tim

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How the duck would the tenant know what type of mortgage you've got? I rented out a flat for five years to 3 seperate couples, I highly doubt that it even remotely occurred to any of them what type of mortgage I had.

I always treated my tenants fairly anyway.

As for fraud, get real man. Some things are serious and some are not. If my mortgage company had of found out they would probably just have upped the rate slightly. They're not interested in taking people to court, they're there to make money.

I fail to see how whether or not you are paying tax on the rent is related to your mortgage type.

Then again, if the property burned down, I bet the insurance company would have ZERO sympathy and make ZERO payout.

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Tenant will not know anything if mail is redirected. And even if it wasn't redirected, it's illegal to open somebody else's mail.

A landlord on the edge, unable to sell or switch to BTL will not be wasting money with a permanent postal redirection from there own property, they'll just have an agreement with the tenant to periodcally send it on, as my former landlord did

As for fraud, get real man. Some things are serious and some are not. If my mortgage company had of found out they would probably just have upped the rate slightly.

Mortgage companies will be VERY interested in this climate. They will demand the LTV is brought into line for a BTL product, and will be very interested in that "slightly" increased rate.

They will also be very interested in switching to BTL for the ease of reposession and protection of all parties afforded by being on the right product.

This is all quite naive of you, but perhaps indicative of the casual approach everyone took during the boom.

it's illegal to open somebody else's mail.

So is mortgage fraud :o

People need to wise up quick as to how ruthless the banks are going to be. They DO NOT WANT all these mortgages on their books and will look for all sorts of clauses to get LTVs back in line, encourage the borrowers move to another bank etc. There is hard evidence of this happening RIGHT NOW

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One near me was for sale last year 120k ish - maybe 130k can't remember... but it's a 2 bed terrace with no parking so not a chance of selling. They let it out in the end and now it's on the market for 89k. Still overpriced and now lookign tattier.

Looking to rent and seen 3 properties in the past week. Fiirst was in v select area, architect designed bungalow, has been up for sale, empty for 9 months, now up for rent originally at £1200 pcm now £895pcm. With 3 different agencies. Bloke who showed me the house said they would waive fees if I used their agency. House still had all old furniture, bedding etc in place from when elderly owner lived there - landlord didn't want to move furniture out "as it would cost him" to do so....er...isn't it costing him standing empty anyway?

2nd property again in expensive area, nice detached 3 bed house outside but inside was awful -agent clearly embarrassed at state of the place - wallpaper falling off mouldy walls, very old and dated inside - again, elderly relative died and daughter couldn't sell....wouldn't spend any money improving house....

3rd property was nice and clean and tidy detached - but interestingly was now empty after '4 Polish blokes' had moved out after 4 years there.

Sign of the times?

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I know one of these accidental landlords - other thing to remember is they are not on BTL mortgages.

Either the mortgage company has given them some grace or they haven't 'fessed up...but they can't continue to rent out their properties indefinitely whilst on a standard homeowner mortgage. Sooner or later these will become forced sales.

I don't know what will happen in the current climate but this is a real story from the last crash.

I had found a house I wanted and sorted out the provisional mortgage offer with the Halifax, who I already had a small mortgage with on my flat.

I couldn't find a buyer for the flat at a high enough price due to the crash. The negative equity would have swallowed up nearly all the cash I had for the house deposit.

I called the Halifax to tell them I was pulling out of the house purchase. Without any prompting they suggested to me that I buy the house and keep the flat too. They would give me 6 months to sell the flat.

I still could not afford to sell so I rented it out. When the Halifax wrote to me about my efforts to sell I told them I had taken a tenant. They agreed to this without any problem but told me I must continue to try and sell it. They contacted me about twice a year for a couple of years and then agreed that I could let it for as long as I liked and did not need to have it up for sale. It never actually was on the market from the time the first tenant moved in anyway.

The terms of my mortgage never changed and I was never charged anything for letting it. I finally sold it 12 years later.

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Two points:

First, tenant will know that the landlord is on an OO mortgage because correspondence will be sent from mortgagee to tenant's adress.

Second, owner's property insurance is void if not owner living there. Oops.

Two points in return.

Postal redirection service?

No property insurance on my flat. It was included in the ground rent.

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People need to wise up quick as to how ruthless the banks are going to be. They DO NOT WANT all these mortgages on their books and will look for all sorts of clauses to get LTVs back in line, encourage the borrowers move to another bank etc. There is hard evidence of this happening RIGHT NOW

What people really need to wise up to is that banks will be ruthless for a while. When it becomes apparent that piling on the pressure just causes mass defaults, they will start to take a more conciliatory line. Those who are making their payments will be cut some slack, just as I was in the last crash.

My advice is that when the banks start to play hardball, you should play the same game with them.

I recently offered HSBC £300 in settlement of an old debt. They replied that it had to be at least £1100 and then threatened court action for the whole £1300 plus £250 costs. I wrote back and told them that they had missed the boat as far as the £300 went. The offer was now £250. Guess what? They accepted £250.

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Two points in return.

Postal redirection service?

No property insurance on my flat. It was included in the ground rent.

I think it's this ...

Yes, a determined cover-your tracks-and-pose-as-OO-but-let-out-your-property accidental landlord might think of re-directing mail, but then again might not (and re-direction ain't permanent), but let's admit that one is dealable with.

The other, the insurance, I think is a condition in the contract of the mortgage, such that the lender must be certain to be indemnified if the house burns down. Insurer won't pay out unless it's the owner's place of residence, so if you are letting you need a more serious and more expensive policy (insurers are wise to the fact that tenants are less likely to cherish the property than the owner is).

Even if the accidental landlord is diligent enough to do this - and how many would even think of it? - it's a possibility that the financial records would alert the lender that the policy was changed and they'd be on to you. Lots of house insurance is also taken out with the lender, of course (sometimes a condition of the mortgage itself).

The point of the original article is that accidental landlords will have to be very professional (and comply with safety sandards and energy ratings and now God knows what else) not to come a horrific cropper in the small print, let alone the big print.

Letting out your falling asset, in other words, ain't the panacea increasing numbers of desperate ALs think it is.

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