Hello board,

Question for you. I might have found a new place to live (yay!) - but as I am paying my rent in advance for the term of the agreement and subsequently handing over a fairly large sum of money, I want to ensure that my landlord is solvent and will maintain his contractual and financial obligation to me; namely, paying his mortgage in a timely fashion.

Does anyone know how I can go about checking his solvency? What would you guys do in my position?

First thing - make sure he's got a BTL mortgage. If he doesn't you'll be out right away if he goes under.

Sami, you're my dream tenant

Not pay rent in advance for the full term of the agreement, unless there's an unusual reason for doing so that you're not telling us. At the very least, the LL should be offering you a significant discount, given that the money will be sitting in his account earning interest rather than yours.

If he has asked you for six or twelve months' rent in advance, then if it was me I'd walk away immediately and find somewhere else. This is not standard practice, and it says to me that he needs the money to cover short-term financial commitments.

Still, if you're determined to go ahead, one thing you could do is demand, as a condition of paying several months' rent up front, that the LL authorises you to check his credit record with the usual agencies (e.g. Equifax and Experian).

Pugsy, are you making fun of me...?

I like to pay my rent in advance because it allows me to negotiate a a decent reduction on the rent - I've done it successfully in the past but what with the uncertainty in the market right now, I don't want to end up with a deadbeat landlord who f*cks off with my money. It's just too dangerous right now

I only wish I could find a sound landlord.

How does the rent reduction compare to what you'd make with the money sitting in a high interest savings account until you paid it to the LL in monthly chunks? Unless the LL hasn't done his sums very thoroughly, my gut feeling would be not much.

I can think of many other disadvantages to paying for a whole AST term up front. For example, what happens if you change jobs and need to relocate to the other end of the country half way through the term? Even if you give notice as per the letter of the law, it might be a hassle getting the money back. Also, what happens if the LL fails to get necessary repairs and maintenance done? If you're paying monthly, then withholding rent is a stick you have to beat him with, if really necessary. But if you've paid for the entire term in advance, he's got no incentive for getting the problems fixed.

Hi,

My landlord's insolvent and trust me, it's one of the most stressful things that can ever happen to you! Here's my advice:

Pay 3 quid on the land registry website to get the details of the property's owner and the name of the mortgage company (if any). Make sure your LL actually own the property! Be *very* wary if the mortgage company is not a household name (e.g. Abbey, C&G etc.), they could be a sub-prime or self-certification lender (like my landlord's!). If the LL has lied in his application you're in real trouble.

Be especially wary of new build properties, their rental value is way less than their cost to buy and many landlords of new builds here in Colchester have gone under (e.g. mine!).

Ask the landlord for a copy of his latest mortgage statement (although many banks only send these out annually). If they have repayed 30% or more of the mortgage then you're probably pretty safe.

I'm not sure if you can run a credit check on someone, but the LL's bank may provide some info though.

Finally be *very* wary, as groups like the infamous Nigerian fraudsters are moving into rental/mortgage fraud in a big way (our local agents are starting to check up on LL's - it's about time!).

The LL could do his due diligence, take out insurance against you not paying and be better off. Ofcourse, this is not an option if the mortgage is dodgey or he doesn't have LLs' insurance, etc.

But to reduce your risk, why not negotiate a cashback option if you're still in the property and all paid up after six months.

Dr Guid - thanks for the advice. I'm sorry you're in such a crappy situation - how is it working out for you?

I did purchase a copy of the title to his house and he has a mortgage with a household name.

Dellboy - what do you mean by cashback?

What has happened is this - I have pestered said landlord through the agent (I think the is the LAST time I will rent through an agent, they're just a major pain in the ass and complicate things) for references. His tenants that I called said that he is reliable and honest. I offered to pay my rent upfront for a discounted rent and either: 1 a non-disturbance letter from his mortgage company stating that I would be able to maintain my tenancy in case he goes bust or 2 have the estate agency agree to hold the funds in trust.

I couldn't get either - the estate agency refused, and the landlord claimed that his house was owned outright. Well, sure enough, when I bought the title on the Land Registry web site, there was a charge registered against the property. I called up the agent asking why she told me that the house was owned outright if there was a mortgage on it and she said that it was just a loan for property renovation costs. I asked her if she thought I was from a different planet because whatever you want to call that chunk of money from the bank, the house is still used as collateral to secure the loan and to me, that's a mortgage.

So, it now ends up that the landlord is becoming impatient and just wants the property let out - seems to me like he needs the money - and I'm going to take it, but at monthly payments, with the rent that I had offered to pay. So it will hopefully work out in my favour, what with getting the rent discount AND not paying up front.

Yes it's a terrible situation, but the latest is that I've just sent off the forms to rent a new property and I'll be attending the reposession hearing next week to ask for more time to move out. Hopefully I only need 1 - 2 days.

I'm in a fortunate situation in that I live in a part of the country where there is loads of rented accommodation and I have a decent income, otherwise it could have been horrendous.

My biggest potential issue is that I'm basically walking out of my tenancy agreement, but my landlord can expect a whirlwind of trouble if I ever hear from him again.

Can I ask you a couple of questions? They might come across as personal - your current situation is exactly what I want to avoid, so I am wondering how it all came about.

I know that in Canada, there are clauses in a mortgage agreement that state that should you take on a tenant, you have to ask permission from the bank, and there are also certain situations, i.e. non-disturbance, where the bank, no matter what, has to leave you in the house until you have finished your contract and only then can the bank repossess the house.

How long did it take for you to be notified of repossession until now? An estate agent tried to tell me that it would take a year to repossess but I am starting to get the feeling that the estate agents that I have dealt with will say anything to get what they want. Not very much integrity going on in that department... I might be new to the country - am Canadian - but I wasn't born yesterday, and my family has been running a successful commercial/residential property business for 30 years. So it upsets me when I hear them making such statements that can't possibly be true as it indicates that they aren't trustworthy - which has a negative effect on the other honest people in the business.

How did the process work for you, when you found out that your landlord could no longer pay his mortgage, and how did you find out?

Sorry for all the questions....

There are two types of residential mortgage a private individual can take out in the UK. An owner-occupier (OO) mortgage is what it says: the mortgage holder has to live in the property as his or her principal residence, and the conditions state that (s)he cannot sub-let it out to anyone else. A buy-to-let mortgage (BTL) allows the owner to let the mortgaged property out to tenants, almost always on the basis of an Assured Shorthold Tenancy (AST), which is the form of private rental contract used in almost all rents these days.

BTL mortgages usually have slightly higher rates and arrangement fees than an OO mortgage on the same property, to reflect the fact that a BTL property is basically an investment which can go up as well as down, just like equities. Therefore, some BTLers have been taking out an OO mortgage and letting the property out, without telling the lender, on the basis that what they don't know won't hurt them. The problem comes when the owner/landlord (LL) gets into trouble with their mortgage repayments, either due to higher interest rates, unexpected repair bills, a void period, market conditions not enabling him/her to raise rents, etc. etc. If the LL has a kosher BTL mortgage, any tenant living in the property under a legally valid AST has the right to remain there until the end of the tenancy, even if the lender repossesses it. In other words, the lender cannot evict the tenant until the the term of the AST is up, or if the tenant gives notice and leaves in the normal way. If, however, the LL has an OO mortgage and is letting the place out in contravention of its terms and conditions, then if the lender repossesses, the tenant can be evicted immediately and with very little notice. The tenant is, in effect, living there illegally and his only recourse is to sue the LL (which, if the LL is broke, will probably be a fruitless exercise).

Ayatollah - thanks for the information and explanation!! It's very helpful.

I don't think that is strictly true, a tenant is protected from eviction regardless of the LL's financial situation. A mortgage company needs a court order under Schedule 2 ground 2 of the 1988 housing act to evict a tenant. This will almost certainly be forth coming but will give you 2 months notice unless you have agreed a contractual notice period of less than that.

The case is much stronger if a formal AST exists, the mortgage company will need to go after the LL for costs.

Too make a further point, "The tenant is, in effect, living there illegally and his only recourse is to sue the LL" the tenant can sue the LL if the tenancy is cut short before the term of the contarct ends but there is nothing illegal about letting a property on an OO mortgage, it is breach of contract and not breach of law. Breach of contract in not an illegal act and is cover by civil law.

If a tenant pays rent and can prove it that are protected by at least 5 different Acts of Law

Hi Matt,

What are the said statutes?

By 'illegal', I mean that the AST is not a legally valid and recognised document in law, because the LL had no legal right to enter into it (i.e. he is prohibited from doing so by the legally binding terms and conditions of his OO mortgage). In relation specifically to the legal protection which a tenant has against eviction which is invoked by legislation regulating ASTs, the AST quite simply doesn't exist and the tenant is not living in the property.

So if the LL defaults on the mortgage, his lender can pursue repo procedings against him, just as if he was actually occupying the property. In other words, as far as the lender is concerned, there is no tenant.



[The following according to the solicitor provided by the legal protection helpline of a friend's contents insurance]: If a tenant is paying rent under a legally valid tenancy agreement, he is protected by law. But an AST entered into by a landlord who has no legal right to sub-let the property - because during the period of the mortgage, the property is actually owned by the lender, and the lender's contract with the mortgage holder prohibits him from sub-letting it - is not a contract which is recognised for the purpose of tenants' legal protection against unlawful eviction. Therefore, the only recourse a tenant who is evicted as the result of a repo of a property which has been sub-let under an OO mortgage has is to sue the LL (if, as Matt points out, the tenant is actually evicted before the term of the AST is up) for breach of contract, simply on the basis that the LL entered into a contract with the tenant, and then failed to provide what he undertook to provide under the terms of that contract.

That might depend on whether the tenant has been paying things like the council tax etc. With rights come responsibilities - with responsibilities come rights. If the AST is invalid then the tenant wants all his CT back, all of his rent, deposit, TV licence etc and has no contract with the owner of the property (mortgage company). That is, owner cannot throw him out unless he signs up to the statutes regarding "tenancy" at some point. At which point he gains protection as a tenant.

In any event, if the AST isn't binding on the tenant but the LL has let him enter the house voluntarily, he can just sit there under common law if he hasn't any issues under statute.

You seem to want it both ways - he's both not a tenant and therefore has to leave..and is not a tenant and therefore is bound by rules and statutes applying to tenants. Doesn't make much sense on the face of it. The issues here are contractual, and the tenant in the house doesn't have one with the company that thinks it's the owner.

It's not the way I want it - it's just the way I've been told it! IMHO the issue of LLs illegally letting properties under OO mortgages is a big problem, and there needs to be stronger legal protection for tenants who are caught up in these circumstances as the innocent victims of 'lie-to-BTLers'. As I say, after a friend feared that they'd be in this situation and sought advice from their contents insurance's legal protection helpline (worth every penny of the £30 or so it adds to your premium, incidentally), the message which came out was that if you are a tenant in this situation and the place is repo-ed, you can be kicked out in very short order and your only legal recourse is against the LL for breach of contract.



The way I understand it, the owner - i.e. the mortgage lender - is not, technically speaking, throwing the tenant out: he's throwing the landlord (the mortgage holder) out. As far as the lender is concerned, the tenant isn't occupying the property at all; the landlord is.



Presumably, that's the legal basis on which lenders evict tenants in these circumstances.



Precisely. It's between the company and the LL, with the 'tenant' (who isn't legally recognised as being a tenant at all, for repossession purposes) caught in the middle.

Fair enough.



I never trust a legal eagel tbh. They all work for the same team, and sometimes do not inform people of simple things they can do to make legal matters easier. In this instance the tenant has no rights, but that means he has no responsibilities unless he admits to them when the matter goes to court. The situation is that the tenant is sat in a property and the legal contract he has is invalid. If it's invalid, then he is a squatter and can stay there as long as all bills are being paid. If it's valid then he's a tenant and has protection.

The legal folks work for the big companies though, and won't reveal this kind of thing to people. "Ignorance is no defence" means a lot more than peopel think it does.



If the property has been registered with the land registry, then the government owns the house, the mortgage company has first equitable possession of it, the landlord second. But this is a contractual arrangement, no one has to sign up to the land registry and the person who is occupying "in fact" hasn't done so. Ownership being a physical impossibility and essentially unprovable, only contract matters. (This scenario assumes that the judge etc will folow the law as it's written.. a highly unlikely occurence if the tenant doesn't know the law and show such knowledge.)



Yes, but as he is just some guy sat in a house and has no agreements with anyone he can't be bound by those agreements. He's just a guy in a house. If you were to go on holiday for 6 months, gave the keys to a friend and his family - how easy would it be to get him out if he didn't want to leave using the law when you came back?

Yes I'm thankful I paid for that helpline as well!

I've sought advice from loads of people, but everyone has said the same - MOVE!!!

While we can argue about the legalities of it the sad fact is that not many of us qualify for legal aid, lawyers charge 150 an hour and they will probably charge you a fortune for the same result.

A letting agent told me that they know of a tenant who was kicked out with 15 minutes notice because the LL had redirected the post and they never saw the court letters.

Regardless of an AST or not and tenant who pays rent is covered by Implied Law Under the 1972, 1985, 1988 and 2001 Housing an Tenants Act. Provided the tenant can prove he is paying rent for a given period he is protected by the law. I strongly suggest you speak to the CAB.

Very true, and not many would have the stomach for the inevitable fight either.

Almost certainly not worth the time and effort compared to moving and I apologise for turning it into a kind of intellectual exercise. (Still interesting though! )

Moving won't keep you up at night with worry or cause your hair to fall out.

Thanks. I would add that unless you really love the property, it's a waste of time defending the action! IMHO, unless you can afford a lawyer, it's not worth defending it either, as an experienced lawyer will find a way out of it through an obscure part of either contract or property law.

I'd like to know if anyone has sued their landlord after such as reposession. I'd certainly consider it, although I am probably not going to be left much out of pocket by all of this, and by the time the lender's solicitor have sued the landlord to recover their fees there won't enough left to buy a newspaper.

Incidentally, does anyone know how to check if someone is worth suing? Can you credit check your ex-landlord?

Agreed. My solution to this would be to simply refuse to rent the place to start with until I see proof that the LL's mortgage is a kosher BTL one and not in arrears. Given that it's increasingly becoming a buyer's market, I imagine that in most areas - and especially if the property I was renting is a new build flat or smaller house - neither the LL nor the letting agent would be likely to object.

I agree with all said the key to renting is paying the rent for an agreed payment on time, it you do that you are a legally a tenant and protected but as you say do you want to stomach the battle. As long as youc an avoid losing your deposit that is all that matter.

There really ought to be a landlord register to prevent bad LL from renting in the future, mine is awful but the house is lovely, have a look www.bennells.com it also tells you about the fun and games we had over landlord responsibility

I think there needs to be a representative/pressure group specifically for private tenants, possibly called something wildly exciting like The Tenants' Association. It could organise a certification scheme for LLs, whereby those who have a good record for charging reasonable rents, maintaining their properties well, not harassing tenants, not messing around over returning deposits etc. go on an approved list which members have access to; a bit like CORGI certification for gas engineers. When a potential tenant goes to a letting agency, the first thing he'd ask is, 'Is this LL TTA-certified?'. If not, you either move on or haggle the rent down.

Such an association could also provide representation and support for tenants who get into disputes with their LLs, operating helplines staffed by property law experts, representing members at Small Claims Court hearings, etc. etc. LLs would be less inclined to try it on if they knew that their tenants could send some serious firepower after them, and I'm sure that most tenants would be very willing to pay a membership fee of, say, £50 a year for the peace of mind it would bring (I certainly would). If other companies got behind such an association - for example, insurance companies offering discounts on contents premiums to tenants who were renting from an approved LL - I'm sure it could work very effectively. The association could also, potentially, keep a blacklist of LLs with a known problem history of disputes or who have court judgments against them, but storing that sort of data could be legally problematic. The absence of an LL from an approved list should be enough for tenants to distinguish between the good LLs and the cowboys.

That is an absolutely brilliant idea.

Well I've been to the repossession hearing this morning and the judge didn't hesitate to sign the possession order. The landlord didn't attend the hearing which was a bit strange, although I suspect there is organised crime involved so that's probably why.

It was a very sobering experience as the arrears were less than 4 month's worth of mortgage payments. It was also sobering in that pretty much all the cases were mortgage companies repossessing property (although I don't know if courts save up all the similar cases for a particular day!).

What was particularly bad was that the landlord didn't actually have a buy to let mortgage, so theoretically I could be out on my ear. Thankfully my letter helped pursuade the judge to give me more time, so I've got another 28 days before the bailiffs come knocking, and I should hopefully be moved out by then.

All I can say is that if you get a repossession letter, act quickly, stop your rental payments, make the court know you're actually living in the property and move out ASAP. If you are unable to move due to financial pressures or have kids or a disability it may be worth getting advice from CAB or Shelter to try and stay in the property for as long as possible.

I was right to not hire a solicitor, they wouldn't really have helped, and I'd have a big hole in my wallet.