May possibly default on my Buy to Let properties?

May possibly default on my Buy to Let properties?

by Readers Question

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10:57 AM, 5th September 2016, About 8 years ago 5

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I have a number of Buy to Lets purchased high end of market in the Liverpool area.  All are in negative equity, struggling and I need to make decisions on what to do with them.default

I am possibly looking to give the keys back to the banks and building societies, but when sold the short fall on the properties could be £200,000.

I am living in rented accommodation myself and have a limited company. Can the banks and building societies pursue my limited company for the shortfall?

I have no savings just a pension in a SIPP.

Many thanks


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Mark Alexander - Founder of Property118

11:19 AM, 5th September 2016, About 8 years ago

Hi Stephen

If you hand back the keys the first thing your lender will do is to appoint LPA receivers. They will probably evict your tenant with a view to selling the properties with vacant possession on the basis that that the properties will then appeal to a wider market.

Once the properties have been sold the lender will then crystallise their losses and chase you for those personally. They will put huge pressure on you which will probably drive you to declaring personal bankruptcy. They may just make you bankrupt themselves.

When you are bankrupt the official receiver will look at your other assets including the value of your limited company. If the company has no assets and only produces an income there is a chance that it will be left alone.

The good news is that the official receiver cannot touch your pension unless it can be proven that you put money into your pension to protect that money from your creditors. This is very rare.

I strongly recommend you seek professional advice from a qualified insolvency practitioner.

Jon Pipllman

11:59 AM, 5th September 2016, About 8 years ago

Just throwing the keys to the lenders is unlikely to achieve the best outcome for you imo.

Echoing what Mark recommends: seek professional advice from a qualified insolvency practitioner before you do anything else.

Investigate what the impact on the company would be if you go down this route, including what it means for the company and it's practical ability to trade if you as a director and / or shareholder end up bankrupt.


15:00 PM, 5th September 2016, About 8 years ago

Hi Stephen

I'm assuming you're struggling because the rent won't cover your costs. I'm not an expert but I have heard of some investors in similar position to you use lease with an option to buy in the future. You would need to research this and as stated above take professional advice.


Mark Alexander - Founder of Property118

15:09 PM, 5th September 2016, About 8 years ago

Reply to the comment left by "Amjed Khan" at "05/09/2016 - 15:00":

I do not recommend that, it could make the position a lot worse, possibly leaving Stephen facing criminal charges.

Consider this scenario.

You are the person who buys the lease option contract. You pay a bigger rent deposit and extra every month to save towards buying the property.

Steohen's lender finds out about this, call in LOA receiver on the basis of him breaching mortgage conditions and then evict you.

How would you feel?

Robbed or defrauded possibly?

You may well want to press charges against Stephen on the grounds of obtaining money by deception as I'm sure you would never enter into such a deal if you knew he was in financial difficult and negative equity would you?

Stephen would have no choice other than to plead guilty and live at Her Majesty's pleasure for a few years. It that's what Stephen really wanted I'm sure he could think of some far more satisfying ways to break the law.

S.E. Landlord

17:33 PM, 5th September 2016, About 8 years ago

Reply to the comment left by "Mark Alexander" at "05/09/2016 - 11:19":

If my memory serves me correctly there was a court case and it may now possible for the pension fund to be taken into account if the person is over the age of 55 and therefore has access to the pension fund - an IFA contributor may be able to comment.

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