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Tenancy Agreement Void?

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I read on another forum that the tenancy agreement can be considered void if the landlord doesnt inform his mortgage company that he is letting the property. Is this correct?

I find that what is written in the law and how it is applied are two completely different things unless you can afford a top knotch solicitor and the risk of losing a case.

If the mortgage company find out that he is letting his property instead of living in it himself you could find yourself being evicted (issued with a section 21) irrespective of the deemed status of the tenancy agreement. I wonder if his buildings insurance is valid? Has he lodged your deposit with a deposit protection scheme (if he hasn't done this then he won't be able to serve the s21)?

In short I don't think that you can work this to your advantage in any easy way though a clever (and expensive) solicitor might be able to help you do so. Modern tenancy agreements have to comply with fair contracts legislation which means that they tend to add rights to the tenant rather than take them away. Even if your tenancy agreement is void, you can still be deemed (IMO) to be a tenant with the usual obligations of a tenant (e.g. regular payment of rent).

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ask his mortgage company or just any bank / bld soc to see what they say - just in case in the future you were in the same situation! ;)

Sadly they said that as long as the landlord completes a form they just 'convert' the mortgage to BTL - no charges and same interest rate.. Gutted.

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Nope. Somebody with a dickhead ex-landlord that is causing me a world of unnecessary grief. To not have to abide by various parts of our tenancy agreement - especially with regard to the inventory would be very helpful.

He meant, "If that were the case what would you become - a squater".

He's right. You entered into a contract with the landlord. What the landlord does outside of that contract doesn't change it.

tim

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Sadly they said that as long as the landlord completes a form they just 'convert' the mortgage to BTL - no charges and same interest rate.. Gutted.

Did they tell you that directly?

Not calling you a liar, but a) the bank would not talk to you about someone elses mortgage and B) no charges and same interest for BTL... erm no not at the moment fella so id be very surprised

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Where there is a mortgage the following possibilities arise:

1. If the tenancy was granted before the mortgage, the tenancy is good against the lender.

2. If the mortgage pre-dates the tenancy and the mortgage contains no restrictions on letting, the tenancy is good against the lender.

3. If the mortgage pre-dates the tenancy and the mortgage contains a restriction on letting, the tenancy is good against the lender if the lender consents to the letting, whether consent is given before or after the tenancy is granted.

4. If the mortgage pre-dates the tenancy and the mortgage contains a restriction on letting and no consent is given by the lender, the tenancy is not binding on the lender. However, if the landlord defaults on the mortgage and, instead of seeking possession, the lender demands rent he "accepts" the tenancy and cannot then seek possession.

However, despite the above:

5. The lender may be able to seek possession if Ground 2 of Schedule 2 to the Housing Act 1988 applies. The ground provides as follows:

The dwelling-house is subject to a mortgage granted before the beginning of the tenancy and -

(a) the mortgagee [ = lender] is entitled to exercise a power of sale conferred on him by the mortgage or by section 101 of the Law of Property Act 1925; and

(b ) the mortgagee requires possession of the dwelling-house for the purpose of disposing of it with vacant possession in exercise of that power; and

(c ) either notice was given as mentioned in Ground 1 above or the court is satisfied that it is just and equitable to dispense with the requirement of notice

And further:

6. The position changes if at any time the tenant agreed to postpone his interest in favour of the lender.

Whatever the position may be, as between landlord and tenant the grant and acceptance of a tenancy binds both and neither can get out of it on the grounds that any lender's consent required was not obtained.

Edited by Damocles

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4. If the mortgage pre-dates the tenancy and the mortgage contains a restriction on letting and no consent is given by the lender, the tenancy is not binding on the lender.

This is the one that can become the nightmare scenario for the tenant.

Whatever the position may be, as between landlord and tenant the grant and acceptance of a tenancy binds both and neither can get out of it on the grounds that any lender's consent required was not obtained.

Sounds right to me as far as it goes.

However, in case (4) above, the landlord has entered into a contract he knows may be voided by a third party, and is taking money under that contract for something he is in no position to offer (i.e. the term and notice period of a tenancy). Smells of fraud to me, and could be grounds for a tenant to take some form of action.

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Did they tell you that directly?

Not calling you a liar, but a) the bank would not talk to you about someone elses mortgage and B) no charges and same interest for BTL... erm no not at the moment fella so id be very surprised

It was Cheltenham and Gloucester. I spoke to their helpdesk and told them i didn't have the mortgage account details on me (which was true as they are not listed in the Land Registry info) but wanted to know what the procedure would be if i wanted to let my flat out instead of live in it. The guy told me that i'd just need to complete a form (cant remember exactly what but something along the lines of a conversion to something form!) I specifically asked if this would mean i'd be looking at higher payments and he said no. That simply they just needed to have the change of circumstances noted on the file. It could have been that he was mistaken but he sounded fairly switched on and not some kind of computer says no calldesk monkey.

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This is the one that can become the nightmare scenario for the tenant.

Sounds right to me as far as it goes.

However, in case (4) above, the landlord has entered into a contract he knows may be voided by a third party, and is taking money under that contract for something he is in no position to offer (i.e. the term and notice period of a tenancy). Smells of fraud to me, and could be grounds for a tenant to take some form of action.

Thanks for that. Luckily he has come to his senses and so i won't need to be making his life a misery after all :) Cheers for all the responses and advice!

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It was Cheltenham and Gloucester. I spoke to their helpdesk and told them i didn't have the mortgage account details on me (which was true as they are not listed in the Land Registry info) but wanted to know what the procedure would be if i wanted to let my flat out instead of live in it. The guy told me that i'd just need to complete a form (cant remember exactly what but something along the lines of a conversion to something form!) I specifically asked if this would mean i'd be looking at higher payments and he said no. That simply they just needed to have the change of circumstances noted on the file. It could have been that he was mistaken but he sounded fairly switched on and not some kind of computer says no calldesk monkey.

Fair do's

Good to know yet another financial institution to avoid putting my money into so they cant hand it out without giving a crap about it actually earning anything.

ta ;)

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However, in case (4) above, the landlord has entered into a contract he knows may be voided by a third party, and is taking money under that contract for something he is in no position to offer (i.e. the term and notice period of a tenancy). Smells of fraud to me, and could be grounds for a tenant to take some form of action.

Few cases are going to amount to criminal fraud. A tenant can only succeed in an action if he can show a loss. Until the lender obtains an order for possession he has no problem and no cause of action.

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he's not read his own bank policy then

http://www.cheltglos.co.uk/mortgages/buy-to-let/buy-to-let-considerations.html

'You can take out a maximum of nine Buy-to-Let mortgages within the Retail Division of the Lloyds Banking Group**, borrowing up to a total of £3 million.

For each property you could borrow between £5,000 and £1,000,000, up to a maximum of 75% of the value of the property (65% for new-build properties). If you want to borrow more than £1,000,000, please call 0800 028 0639* or visit your local branch.'

http://www.cheltglos.co.uk/mortgages/am-i-eligible/

'Your deposit

When you look at the details of the mortgage deals, you’ll see there are different rates depending on what percentage of the property’s value you need to borrow. You'll find that better rates are available if you have a bigger deposit - that's the amount of money you're putting into the property yourself. With a C&G mortgage, you'll need to put at least 10% of the property's value yourself, but you can get lower rates if you're putting in more than that. '

it used to be the case they'd swithc it over without a problem.if they found out he was letting on an OO mortgage,he would get a minimum 15% margin call.and probably a higher rate too.

Hmm. I heard anecdotally that his mortgage payments were higher than my rent i i'd suspect he is mortgaged for well over 75%. I'll bare that in mind if he kicks off again - cheers :)

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Few cases are going to amount to criminal fraud. A tenant can only succeed in an action if he can show a loss. Until the lender obtains an order for possession he has no problem and no cause of action.

Loss of security: the term of the lease, and the statutory notice period.

As in, for instance, the first comment on http://bahumbug.wordpress.com/2010/03/30/dramahome/

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Loss of security: the term of the lease, and the statutory notice period.

As in, for instance, the first comment on http://bahumbug.wordpress.com/2010/03/30/dramahome/

If the lender takes no action there is no loss. If you learn that your landlord has let without consent where required you cannot go to court and claim a loss that may never arise - it would be like claiming on your insurance on the grounds that the property may burn down.

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