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Living In Undeclared Btl

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BTL can cover a number of scenarios. And yesterday I started thinking about this as it might affect me personally (a bit).

1) Bought intentionally to BTL. Clueless about tax liabilities -or- trying to cheat

2) Had a property that for whatever reason they didn't want to or couldn't sell, so rented it out thinking property only ever goes up.

Now, I am in a (2) type house. A lady had her house - watched too much TeeeVeeee - so popped out to Ikea - did the WHOLE house out, bunged on a conservatory. Tried to stick it on the market. But oops ... she didn't like the price the estate agent was telling her as it had cost her so much to tart it up. So she moved in with her bf and rented the house out to somebody she knew rather than selling it.

So firstly, I bet her mortgage company don't know. Secondly I bet the tax people don't know.

But more importantly, knowing the sums involved, I bet their mortgage is more than the sums involved. By a LOT. We must be talking £140k/£500pm.

So, housemate's signing on now - going to get HB. But in the meantime she's written to the landlady to say she won't be paying this month's rent on time. She's quite blase about it. Assuming her rent pays the mortgage - AND - assuming the house owner can actually afford the mortgage because she used to live here and pay it. I tried doing the sums for her and saying "I bet the LL pays a bit each month even when you pay on time", but it went right over her head.

Also, housemate hasn't actually signed the renewal lease yet ...

Who knows. Maybe she'll get notice to quit... they don't know about me (neither do the HB people if you're wondering).

The whole thing's a stack of dodgy, illegal cards.

No skin off my nose, I STR so I'll just have to move. I see this as a new opportunity as I am travelling light. Bit different for the rest of them.

:)

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BTL can cover a number of scenarios. And yesterday I started thinking about this as it might affect me personally (a bit).

1) Bought intentionally to BTL. Clueless about tax liabilities -or- trying to cheat

2) Had a property that for whatever reason they didn't want to or couldn't sell, so rented it out thinking property only ever goes up.

Now, I am in a (2) type house. A lady had her house - watched too much TeeeVeeee - so popped out to Ikea - did the WHOLE house out, bunged on a conservatory. Tried to stick it on the market. But oops ... she didn't like the price the estate agent was telling her as it had cost her so much to tart it up. So she moved in with her bf and rented the house out to somebody she knew rather than selling it.

So firstly, I bet her mortgage company don't know. Secondly I bet the tax people don't know.

But more importantly, knowing the sums involved, I bet their mortgage is more than the sums involved. By a LOT. We must be talking £140k/£500pm.

So, housemate's signing on now - going to get HB. But in the meantime she's written to the landlady to say she won't be paying this month's rent on time. She's quite blase about it. Assuming her rent pays the mortgage - AND - assuming the house owner can actually afford the mortgage because she used to live here and pay it. I tried doing the sums for her and saying "I bet the LL pays a bit each month even when you pay on time", but it went right over her head.

Also, housemate hasn't actually signed the renewal lease yet ...

Who knows. Maybe she'll get notice to quit... they don't know about me (neither do the HB people if you're wondering).

The whole thing's a stack of dodgy, illegal cards.

No skin off my nose, I STR so I'll just have to move. I see this as a new opportunity as I am travelling light. Bit different for the rest of them.

:)

I know of two other people in a similiar situations. Both have met someone. Got engaged and moved in with their partner to rent out the remaining property. How many people did this even 5 years ago? Again this is greed and something I hope the tax man gets a hold of.

I think alot of people have done this as they see that if the rent covers the mortgage of property 2 then they have nothing to lose and everything to gain.

I hope they get their fingers burn't

Edited by equitystasher

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I recently called up a letting agent about a house to rent. Totally new house, never been lived in before and I asked the agent if the owner had permission to rent out the house from his/her building society. I was told that I had no right to ask that question. I then pointed out that no doubt the LL would be asking for a credit reference from me and I just wanted ot know if the LL was legitimatley renting out the house otherwise the lease would be invalid and I could be evicted. The EA still did not get it and insited I had no right to know. I declined to go and see it.

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I believe the intention here was to sit on it until the market had moved upwards, so they could "get their money back" from their first poor decision about tarting it up and selling it.

They thought (making figures up)

House worth £130k + £15k of work = £150-160k

In fact it looks like

House worth £130k+£15k of work = £135k

So I suspect it was "wait a year and it'll be worth the higher amount"

Give it another year it will be

House worth £115k+£15k of work = £115k

Ha!

Ooooops. Eh!

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I asked the agent if the owner had permission to rent out the house from his/her building society.

I just wanted ot know if the LL was legitimatley renting out the house otherwise the lease would be invalid and I could be evicted.

Interesting point.

It's always been assumed that dirty, dirty, peasant renters need to be thoroughly checked because they are so scummy and unreliable.

Yet now it is the tax dodging, criminal landlords that WE should be checking.

Of course the EA didn't get it. Wasn't in their 5-page training manual. And look ... he's not even wiped that wet bit behind his ears today.

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Stangely enough I enquired with my mortgage lender last week about renting our house out for a year whilst we renovate a place in France.

They said no problem as long as it was rented 'furnished' with a maximum 1 year contract.

No charges

No problems

Will probably get round to advertising it privately - can't be bothered wasting money on letting agents.

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Undeclared or not the sheer number of property "removation" going on round here today is shocking. There's about 5 on one street - at least one with a to let board outside. Skips galore - it can't be people doing DIY for themselves on a workday?

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Is there any way a prospective renter can look up if there's outstanding mortgage debt on a property, without the EA or owner being involved, and approach the mortgage lender directly for confirmation that they've sold it on a BTL mortgage rather than an OO one?

If prospective BTLers knew that anyone contemplating renting the property was likely to check with mortgage lenders independently (thereby shopping them if they are trying to pull a fast one), this scam would stop pretty quickly.

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Is there a "shop your landlord site/number"?

If not we should set one up..

First we have crimestoppers

now we have LandLord stoppers <insert better name here>

I agree. I've been thinking of this for a few days, but the problem is: how on earth do you find out who their mortgage is with.

Even when you phone about your own mortgage you have to give the specific mortgage reference number, another stumbling block potentially.

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otherwise the lease would be invalid and I could be evicted.

Do you know the law on this point or are you just speculating? Any lawyers out there who can comment on this one?

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I recently called up a letting agent about a house to rent. Totally new house, never been lived in before and I asked the agent if the owner had permission to rent out the house from his/her building society. I was told that I had no right to ask that question. I then pointed out that no doubt the LL would be asking for a credit reference from me and I just wanted ot know if the LL was legitimatley renting out the house otherwise the lease would be invalid and I could be evicted. The EA still did not get it and insited I had no right to know. I declined to go and see it.

I renewed our AST just last week and noticed there was actually a clause in there about this, something to the effect of "The LL declares they have all legal permissions to rent out the property".

However, when put together with most of the other barmy clauses in the agreement its probably meaningless.

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Is there any way a prospective renter can look up if there's outstanding mortgage debt on a property, without the EA or owner being involved, and approach the mortgage lender directly for confirmation that they've sold it on a BTL mortgage rather than an OO one?

If prospective BTLers knew that anyone contemplating renting the property was likely to check with mortgage lenders independently (thereby shopping them if they are trying to pull a fast one), this scam would stop pretty quickly.

you can get limited information from the land registry. If the house was purchased after 2000 you can get the purchase price as well as who the mortgage was taken out with. Once the owner has title absolute this information is listed on the deeds.

Also, I believe that if a house was re-mortgaged, this is now recorded at the land registry - I'm sure that this was something that was proposed or it may have started happening. Any legal bods here that can confirm the MEW aspect?

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All the 'The LL certifies that he's being a good boy' clause in the AST contract means is that you can sue him up the ass if it turns out that they were lying on that point and you're rich enough to do so (though presumably for an amount below £5k, you could go down the Small Claims route). If he's not being a good boy, the AST is not legally valid and you could be in trouble.

There was another thread on here dealing with this issue, and if I remember correctly, the gist was as follows.

1. If the LL has a kosher BTL mortgage (or another formal agreement from the lender to rent it, e.g. an OO who is going away for a year or two and wants to rent temporarily), then a tenant who has rented the property under an AST cannot be evicted if the LL defaults on his/her mortgage - the property can't be repoed until the tenancy expires.

2. But if the LL does not have a BTL mortgage - in other words, if he has an OO mortgage and is renting out the property without the lender's knowledge or consent - then the the AST is not a legally binding contract and therefore if the property is repoed, the tenant can be kicked out there and then. That's why BTL mortgages tend to have higher rates and/or fees: to protect the lender from loss of revenue while waiting for an AST to expire so then can repo the property, if that scenario comes to pass.

If the above is correct, then a potential tenant has every legitimate reason to demand evidence that either the landlord owns the place outright or has a proper BTL mortgage, just as the landlord has every legitimate reason to demand credit references from the tenant.

Edited by The Ayatollah Bugheri

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I came to thinking that it's better to rent from an agency rather than via a landlord directly, for the reason that if the property were reposessed by the lender, it's easier to have recourse against the agent, working from a fixed office in a high street, than it is to privately sue the landlord for losses. The fact that the landlord is the one with the "wrong" mortgage would be irrelevant because your contract is with the agent, not the landlord. It's up to the agent to check the property is OK to let as they're responsible if it is not.

For instance - if you were two months into a six month contract and got thrown out of the property by the mortgage lender, the least the agency could do - to prevent some quite hefty legal bills from you later - is put you straight into another local property of your choosing for the same money for the rest of the tenancy period, and refund any costs you incur, and it'd be straightforward to sue the agency if they refused plus send a few letters to the local paper which wouldn't do their reputation much good.

I renewed our AST just last week and noticed there was actually a clause in there about this, something to the effect of "The LL declares they have all legal permissions to rent out the property".

This sounds like the agent including this clause to try to pretend that the landlord has some responsibility in this deal, whereas the landlord does not: all the responsbility lies with the agent if that's who the contract is with.

Edited by DTMark

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Do you know the law on this point or are you just speculating? Any lawyers out there who can comment on this one?

http://www.lawpack.co.uk/faq_landlord_and_tenant.asp#4963

Do I need to get permission from anyone before letting out my property?

If you have a mortgage or are going to let a leasehold flat, you need to check to see if you need to obtain permission from your mortgage company or your landlord before letting. If consent is not obtained, this could have serious consequences, including the lender or landlord taking possession proceedings against you. Your mortgage company may impose conditions for letting; needless to say, you should be careful to comply with these.

Although it doesn't mention there I believe letting, without lender's consent, also invalidates LL's insurance.

This is a very good thread and I think it should be pinned to make people aware of the fact that there is nothing wrong to check landlord's position in terms of legality before renting. They credit check the tenants don't they so two can play that game :lol:

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Whilst I dont want to pi55 on your bonfire I think it is likely that most recent BTL investors probably have no tax liabilty on the rental income.

From the rent deduct the mortgage int, then repairs to the fabric of the building then 10% of the rent for wear and tear on furnishings, a fallow month, agents fees, gas certification etc, etc unless a mortgage is less than 45% of the value of a property i would be surprised if there was any liabilty to speak of.

HOWEVER on sale there may (at the moment) be some nice capital profits which should give rise to CGT and that is of interest to the Revenue. A friend of mine who is a senior inspector said that is the source of profits they are looking for particularly amongst those on PAYE who upto recently have tended generally to be left alone, its the self employed who tend to be looked at quite carefully

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When I first got my house valued by all the EAs, I also considered letting it.

My mortgage was with the Woolwich. I asked them for the Permission to Let form. They were to take about 3 weeks to say yay/nay. I bet the timescales (a month including getting the form) would be too long for people trying to dig themselves out of a hole.

So those who start trying to do the right thing might in the end think "f**k it - takes too long, I want to be on the letting agent's book today, not wait another month to find out if I even can"

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Do you know the law on this point or are you just speculating? Any lawyers out there who can comment on this one?

The Scottish system registering all Landlords in place from 2006 is required in the rest of the UK:

Private landlord registration - In Scotland

From 30 April 2006 all private landlords letting property in Scotland must be registered or have applied for registration in the register of landlords. Landlords can either apply online at www.landlordregistrationscotland.gov.uk or can apply through their local authority. Landlords should contact their local authority for more details. Applying online attracts a discount.

The aim of private landlord registration is to ensure that all private landlords are “fit and proper” to let residential property. This requirement means that local authorities can remove disreputable landlords from the market, and protect tenants and their neighbours from the impact of antisocial behaviour and mismanaged property.

More information about private landlord registration can be found at www.betterrentingscotland.com.

http://www.adviceguide.org.uk/scotland/com...on_scotland.htm

Let's get civilised like the Scots!...... :unsure::o:huh:

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http://www.lawpack.co.uk/faq_landlord_and_tenant.asp#4963

Do I need to get permission from anyone before letting out my property?

Although it doesn't mention there I believe letting, without lender's consent, also invalidates LL's insurance.

This is a very good thread and I think it should be pinned to make people aware of the fact that there is nothing wrong to check landlord's position in terms of legality before renting. They credit check the tenants don't they so two can play that game :lol:

You are correct. Failure of the LL to advise insurers the property is let, would be deemed non-disclosure of a material fact, going to the root of the contract and the policy would be voidable. Indeed, even if you lived in the propertyand let a room you would still need to advise mortgagees and insurers ; still amounts to non-standard occupation which it would be argued in court could affect the judgement of a prudent underwriter!

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I know of two other people in a similiar situations. Both have met someone. Got engaged and moved in with their partner to rent out the remaining property. How many people did this even 5 years ago? Again this is greed and something I hope the tax man gets a hold of.

Which bit of what they've done do you consider to be greed: the keeping/letting of one of their two properties, the (alleged) tax avoidance, or something else?

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