Letting to previous owners
I have recently signed for a property (completing next week), and the estate agent (with whom I have had a long business relationship) indicated that the previous owners would be interested in renting it back from me.
I must point out that the property was a repossessed house and therefore sold by the bank as a mortgagee in possession.
I do not have a mortgage on the house, but I have noted from other BTL mortgages which I hold on other houses that often there is a clause prohibiting renting back to a previous owner. Is there a reason why banks do not like this? If there is this would make me cautious about doing it, but on the other hand, renting back to the previous owners might save me money as the house is currently decorated to their tastes (and a very high standard, not perhaps to everyone’s tastes!!).
The thoughts of those more knowledgeable and experienced than me would be very much appreciated.
Many thanks
William
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Buy to Let Property Investment Income at Retirement
Member Since October 2014 - Comments: 7
9:07 AM, 2nd November 2014, About 11 years ago
The halcyon days finished when the Credit Crunch arrived: lenders are now more specific on what is acceptable and what isn’t, today they have gone to specific lengths to preclude the acceptance of mortgage applications from brokers where the properties have been sourced directly or indirectly by Property Investment firms or Clubs , something which is long overdue.
Buy to Let is an exciting niche market but when anyone tries to circumvent the stated criteria of major lenders then they only have themselves to blame when they are caught out and placed on the lenders Hunter System.
Member Since October 2013 - Comments: 1308 - Articles: 10
11:45 AM, 2nd November 2014, About 11 years ago
Reply to the comment left by “Silver Surfer” at “02/11/2014 – 09:07“:
What is the “Hunter System”?
Member Since January 2011 - Comments: 12196 - Articles: 1396
11:50 AM, 2nd November 2014, About 11 years ago
Reply to the comment left by “Robert Mellors” at “02/11/2014 – 11:45“:
It is a fraud abuse system shared by lenders. The Area 51 of the UK credit industry.
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Member Since January 2011 - Comments: 12196 - Articles: 1396
11:56 AM, 2nd November 2014, About 11 years ago
Reply to the comment left by “Robert Mellors” at “02/11/2014 – 11:45“:
See >>> http://www.nhunter.co.uk/
If you say you earn £50k to one lender and £100k to another you will come up on a hunter match.
If one lender suspects you of fraud it is believed this information is also shared by Hunter. If you know how LRS works for landlords then hunter is similar but for lenders.
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Member Since October 2013 - Comments: 1308 - Articles: 10
12:03 PM, 2nd November 2014, About 11 years ago
Reply to the comment left by “Mark Alexander” at “02/11/2014 – 11:56“:
What is LRS?
Member Since May 2014 - Comments: 252
12:10 PM, 2nd November 2014, About 11 years ago
The FCA website looks like its aimed at direct purchase, but if you buy through an Estate Agent who has set the price then there is no direct involvement with the vendor wouldn’t that be okay?
Member Since January 2011 - Comments: 12196 - Articles: 1396
12:17 PM, 2nd November 2014, About 11 years ago
Reply to the comment left by “Colin Dartnell” at “02/11/2014 – 12:10“:
http://www.landlordreferencing.co.uk/
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Member Since January 2011 - Comments: 12196 - Articles: 1396
12:19 PM, 2nd November 2014, About 11 years ago
Reply to the comment left by “Colin Dartnell” at “02/11/2014 – 12:10“:
No
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Member Since October 2013 - Comments: 1308 - Articles: 10
12:31 PM, 2nd November 2014, About 11 years ago
Reply to the comment left by “Mark Alexander” at “02/11/2014 – 12:17“:
Thank you for the link, LRS could have been so many different things. The Landlord Referencing Service website looks like it could be very useful for some types of lettings, but less so for others.
I was not aware of the Hunter website/service, so thank you to Silver Surfer for mentioning this and Mark for posting the website link and explanation.
Member Since October 2014 - Comments: 7
2:54 PM, 2nd November 2014, About 11 years ago
Reply to the comment left by “Robert Mellors” at “02/11/2014 – 11:45“:
Hi Robert
As Mark has articulated this is a system that no-one wants to get placed on as it indictaes to all participating lenders that either an attempt has been made to procure a mortgage by uttering false information/declarations or a loan has been subsequently discovered as being fraudulent. As an addon to this , if a broker was instrumental in placing the mortgage he/she will have to considerable lengths to demonstrate that all prudent checks had been made to ensure the integrity of such applications e.g an application is made for a Buy to Let mortgage when in fact the property was for the applicants own occupation but because of the MMR their personal circumstances would not enable them to secure the necessary finance.