Safe as houses: Do you know how financially secure your landlord is?
Anyone with a buy-to-let mortgage will not benefit from the government's announcement on delaying interest payments, and that could be bad news for tenants.
Landlords with buy-to-let mortgages are now falling behind with their payments more quickly than owner occupiers, according to the latest figures from the Council of Mortgage lenders.
If that leads to repossession, tenants are often not told what is happening and can very quickly face losing their home through no fault of their own.
Are you a tenant facing losing your home through no fault of your own?
Or perhaps you are a landlord in financial difficulty.
Do you think more should be done to help landlords if they fall into arrears?
Maybe you feel there is a big difference between bailing out a landlord and bailing out someone who is living in their own home.
We asked for your comments, a selection of which are below. The debate is now closed.
MOST RECENT COMMENTS:
When I started renting I had to pay high fees to an agency who essentially did nothing. They made me provide financial details, references and details of my work. I had no details of the landlord's situation which in the current light seems to be an imbalance in our rights. I signed a lease agreement for 12 months, which would continue even to a new owner. The same should apply in the case of a repossession with the bank acting as my landlord until the contract expires.
Buy-to-let mortgage boom drove a lot of the unsustainable rise in house prices - egged on by the banks with their irresponsible lending. I have the deepest sympathy for the tenants of these properties - maybe they should be helped to buy the properties themselves at a realistic price - after all their rent was paying off the mortgage and also lining the pocket of the landlord.
I am a tenant facing this situation right now and, from what I've been told, it is not generally the case that the tenancy agreement continues after repossession by the lender. Even when the landlord has a buy-to-let mortgage, the tenancy agreement becomes void. The tenants, who have paid their rent and looked after the property, are treated no better than squatters. The lenders want vacant possession and then sell the property. Although a "notice to occupier" should be sent to the property 14 days before the court hearing, many tenants miss this and know nothing until the bailiff is at the door. The tenants are given just enough time to pack a bag & get out (if they happen to be in at the time), the locks are changed, and they then have 14 days to pick up their belongings. And there's a further problem now: with so many buy-to-let properties being repossessed, one may well end up in the same situation again in a few months' time. As a tenant it is very difficult to find out much about the landlord before taking out a lease, certainly not their mortgage position. As a tenant you pay a fee for credit referencing on yourself; it's about time we had the same kind of thing for landlords. Tenants require more protection, as they risk being literally out on the street if the landlord defaults. When are we going to get a change in the law so that rent-paying, law-abiding tenants get reasonable notice following repossession (e.g. a minimum of 2 months notice, the same as under Section 21 of the Housing Act 1988)?
From your other readers comments it would seem that it is the bailiffs that require regulating. To turn up at someone's door and force entry without understanding the real legal position behind the occupancy is not acceptable. As a past landlord I deplore that sort of behaviour and would be mortified to think of a young couple being treated in such an underhand manner. I wonder if some lenders quietly endorse such behaviour as a quick clean fix?
Anthony Thomson, Fareham
I regard the whole of the "borrow-to-let" industry as another example of how the effectively unregulated UK finance industry allows immoral people to make money at the expense of the poorest or most vulnerable of UK society. If you have the capital to purchase a property outright and then let it, fair enough. But to borrow money to purchase a property to let it? How immoral is that? To borrow money from a bank, buy the property, then sit on your backside collecting the profit? A sickening business model employed by lazy, antisocial people. It also pushes up property prices and rents. The results of when it goes wrong are becoming apparent. Homeless people. Blameless people who didn't or couldn't take the risk of taking out insane loans on ridiculously overpriced property. A simple answer to these problems would be to outlaw loans on residential property which isn't the lenders primary residence.
John Green, Matlock
I have to disagree with your statements. I am a buy-to-let landlord with a tracker mortgage on the property. A few months ago the rent barely covered the mortgage of £430 per month. Now with the drop in interest rates the mortgage payments are reduced to about £210 per month. It's not all bad news for landlords!
Howard Baker, Burnley
We have just rented whilst building work was done on our property. We paid up front for three months rental. Two months in we received the "you must vacate in two weeks" notice. The landlord wasn't in the country and assured us he could sort it. We gave him five days and contacted the solicitors for the lender, whilst the landlord had paid £2,000 on (supposedly) the agreement that proceedings would stop, the lender's solicitors then told us there was no such agreement and we would still be evicted. This was Monday and eviction was Friday. Whilst almost all rental agencies didn't want to know, one company did, though only by being able to provide two months rent in cash that day (£1,200). We then managed to move in time. We later found out that on the morning of eviction the lender offered to back out of the eviction, instead our landlord has (supposedly) gone into bankruptcy and we're down approximately £1,000. "Luckily" I was able to essentially "add to the credit card bill" to pay for this, though even then only because we had cash that was intended for the builder. Since we're both employed the council refused to help, even arranging the removal men was difficult due to the short notice. What we couldn't understand was that whilst the two weeks letter was sent to the rented address, the other letters seem to have not been. Also in this case, why does the council not feel its appropriate to help with temporary/emergency housing? All in all , an experience I'd have rather done without!
It is my tenants that are pushing themselves toward eviction. They have decided that in these credit crunch times that they can't afford the rent so haven't paid. With the rent money paying the mortgage they will only have themselves to blame when they get evicted. Believe me, if I lose my house because they reneged on our agreement I will hound them into bankruptcy.
Last July, my husband and I were forced to move out of the four bedroom detached property we were renting within four days. We found out completely by accident and it was because the landlord had fallen behind with his mortgage and was being repossessed. We had been in the property for a year, and were repeatedly told that everything would be ok by the agency we were renting with. However, upon further investigation we found that the landlord did not have a buy-to-let mortgage and we were illegal occupiers. We went everywhere for help, including the CAB, the courts and solicitors. No one was interested because we were the tenants. We would have been homeless if we had not found a property at the last minute. After we moved out we discovered that the agency was trying to let out the property again. It is now up for sale. It is bad enough if the owner has a buy-to-let mortgage, but if they do not have permission from their mortgage company you are treated like squatters. As respectable people who simply choose to rent, we strongly believe that more needs to be done to support the tenant, and quickly. Also letting agencies should be unable to let out properties that do not have a buy-to-let mortgage.
What a Mickey Mouse way we home people in the UK, it's a joke.
Charlie, Saffron Walden
Last year I came home to find that the locks on my property had been changed. I moved into a hotel with my wife and daughter and contacted my solicitor. Eventually, we got the letting agent and the bank to pay our costs, including a refund of some of the rent, because the letting agent hadn't bothered to vet the landlord. I now know that tenants are protected because of the Protection From Eviction Act 1977 and the Housing Act 1988 - they can get a lot of money back if they need to.
Gary Charter, London
I was a buy-to-let landlord in the late 1990s, a good time to invest in property. I actually made more in property in three years than in my consulting business. In those days, I didn't take out a mortgage where the payments could not have been covered by the rent. I'm not sure I could have got one with the bank I used. I had good tenants. The one issue was that they did not always pay the rent on time, sometimes being late or only paying part. This meant that the money was not always in the account to pay the mortgage. Luckily I was able to juggle funds to make sure it was always paid. I did write a couple of letters to encourage the tenants to pay on time, but as I knew they were starting a business and money was tight I didn't get to threatening eviction for non payment. I can't help but feel that running a business where you cannot get your hands on money to pay a mortgage if tenants do pay on time is dishonest. It is sad, but if you expect the gain, you should take the risk. Certainly no honest tenant should pay for a landlord's failures. Presumably if they do pay the rent and the landlord defaults, it would make sense for the bank to take over the lease so at least part of the debt is being serviced. A pleasant postscript. I recently discovered that my tenants' business has thrived and expanded. They will never know, but I do get a warm feeling knowing that I may have helped with their cash flow in the early stages.
Neil Wilson, Bristol
Current policies are very unfair on tenants. The government is obsessed with trying to prop up the housing market. A recovery can only take place once the housing market has deflated fully. The sooner we get there, the better. The government are intent on spending billions on trying to stop this from happening. All it does it drag out the inevitable and extend the pain.
Despite the comments from Tony in Reading and despite what the law might say, the fact is that tenants are being evicted with barely any notice at all. A friend of mine was evicted with four days' notice and she is a single mother with a child. In a panic she went to the Local Council housing office and they said they are getting more and more cases like this. Somehow or other, landlords and lenders are skirting the law.
I am a landlord near Frankfurt in Germany. Tenants in Germany after signing a lease basically become the new owners and cannot be evicted or the lease cancelled by the landlord. They also have the advantage of having someone to order about should the heating not work properly, if the neighbours are too noisy or there is building work is in the neighbourhood - the tenants are within there right to decide to reduce the rent and sue. The tenants often do not even have to decorate the flat or house upon moving out, many a landlord has been reduced to tears and bankruptcy after years in the courts trying to evict tenants who ruin the property and refuse to pay the rent. Germany has gone too far in tenant protection but the English laws obviously root in the doomsday book, time for change ladies and gentlemen.
Roger Harman, Germany, Neu-Anspach
I have a buy-to-let flat in Sheffield which I acquired in May 2007. By September, I had the flat let to tenants at a rent which just covered the mortgage and outgoings. I have since renewed the tenancy at a similar rental, but I made sure I could cover any shortfall for void periods or should mortgage payments rise. I realise now that this will not be a good investment but I expect to break even on it over a 10 year period. To have made a good investment from it, I now realise that I should have been into it in 2002 or earlier. Most people will have realised that prices were not going to rise forever and we should take the hit. We live in a new bail-out society with no risk attached to any decisions we make. If there is no flip-side, then that's ok, but we all know it is going to cost us in the long term. For the developed nations of the world, the problems we will have to face associated with climate change, personal finances, pensions, greed, poverty, corruption etc will, I feel, be the gravest problem for our society to surmount in the future.
Paul Baker, Guildford
My property was let to tenants via the local council. These tenants receives housing benefits. According to government legislation, the tenants have the right to decide whether the payments from the council go to them or the landlord. In my case, they chose that the council should pay them and they will in turn pay me. However, they have refused to pass on the rent to me. Rent arrears have accumulated to the tune of over £2,000. The council is asking me to take the tenants to court. I find it extremely distressing as I cannot keep up with repaying my mortgage. I can foresee the property being repossessed by my lenders.
Jonas Smith, London
My son and his girlfriend had the experience of being model tenants - they looked after the property very well, the rent was up to date and paid by standing order and they were about seven months into a year's tenancy. Although they had four days' notice of the court hearing, because they did not know whether or not the landlord would be repossessed, they could not look for another property. On the day of the hearing, we waited to hear whether he had been repossessed. Five minutes after the phone call to say that possession had been granted, the bailiffs were knocking at the door (they had been waiting outside the block of flats for the call) and we then had about an hour to hire a van and move their belongings out. They lost their deposit and, with all their belongings in a van, we had to drive round London looking for alternative accommodation. We only managed to get them into another flat on the same day because I paid six months' rent in advance (having checked that the landlord did not have a buy to let mortgage). It was a hugely distressing and stressful event for all of us. I feel angry that good tenants are being penalised for the actions of their landlords. We think that the law should be changed so that if lenders repossess, they must allow the tenant to continue paying the rent to the lender for the remainder of the tenancy as long as they have a good payment record.
Maya Bimson, Bristol
The same thing happened to me as happened to the couple on your programme, ironically in Huddersfield. I also found that when I later applied for a mortgage of my own a few years later the fact that I'd been living in a property that had been repossessed showed up on the credit search. Luckily my lender was satisfied with my explanation of the circumstances.
Rachel Turner, Huddersfield
I am a landlord with five properties. I do not believe other landlords should be given special help: their properties were an investment and they should expect to suffer from falling asset prices just as they would do if they had invested in the stock market instead, or if they had invested in a property-based unit trust. Landlords who wish to be treated as businesses should not expect to receive benefits aimed at homeowners: they should look to government loans to small businesses instead. I don't understand how tenants can be required to leave their home "very quickly". Under the terms of a tenancy agreement they will have the right to live in the property for up to six months, and must be given two months' formal written notice, issued on the day before their rent is due. Tenants cannot be simply kicked out in one or two days when a house is repossessed, and they should refuse to leave unless they have been given notice in the proper manner. Under the terms of the tenancy agreement the mortgage company should simply become the new landlord. I see no reason for any change in the law or special measures to "protect" tenants.
In 1994 I was renting a flat in Edinburgh - the bailiffs broke the door in to evict us - we had no idea the landlord had said we were relatives. After much pleading we were allowed to stay a few weeks until we took possession of a new flat. It was really frightening; my son was out for the day with a childminder and could have come home to find us on the street with all our belongings. Tenants deserve better treatment. There's not enough social housing so the government, local authorities and lenders must look for solutions to this problem. It's not a matter of bailing out the landlords - it's about protecting tenants.
Sulaima Elmi, Edinburgh
The law was changed after the last recession to say the building society must send notices to the occupier so that tenants are warned of potential repossessions and it therefore does not come as a complete surprise. If the building society originally agreed to the let they will very rarely try to evict tenants during the term of the tenancy. In these circumstances, they will see out the tenancy and take the rent to offset mortgage payments. If permission were not granted then the tenant may be evicted. Tenants should check that permission has been given by the building society before taking a let - that would be good advice rather than scaremongering and worrying tenants where permission for the let was given. Action should be taken against any lender who does not notify the occupier of action. I was chairman of ARLA from 1999 for two and a half years and a Council Member for 13 years.
Frances Burkinshaw, Wadhurst, Tunbridge Wells, Kent
The comments we publish are not necessarily the views of the BBC but will reflect the balance of views we have received. It is helpful if contributors state if they work for any organisation relevant to an issue discussed. Readers should form their own views on whether messages published represent undeclared interests, or views prompted by a common source.