Mortgage provider mandating back-to-back fixed term AST

by Readers Question

10:01 AM, 27th April 2015
About 4 years ago

Mortgage provider mandating back-to-back fixed term AST

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Mortgage provider mandating back-to-back fixed term AST

Having nearly come to the end a remortgage process the lender has now sent me a form that am supposed to sign committing me to fixed term tenancy agreements that must be no longer than 12 months with a ground 2 (Used when the property is subject to a mortgage which existed before the start of the tenancy and the landlord wants to possess the property).

Where the tenancy is to run on beyond the initial (or any subsequent) fixed term a new fixed term agreement (max 12 months) must be issued with a ground 2.

Ok so I can understand why they insist on a ground 2 for the initial fixed term but;

1. Why a max of 12 months?

2. Why do I have to replace the initial fixed term with another fixed term. Surely after the initial fixed term it can run as a periodic with the same protection being provided with a section 21 accelerated procedure if possession is required. It wouldn’t be so bad if the property was let under a single AST but it’s an HMO with five AST’s some of which are already under a periodic term!

Am I missing something?

Robfixed



Comments

Neil Patterson

10:06 AM, 27th April 2015
About 4 years ago

Hi Rob,

I have not run across a lender that insists upon fixed terms after the initial AST before.

This type of criteria is usually designed to allow the lender quicker possession if something goes wrong hence a maximum 12 month term.

Can I ask who the lender is please.

Romain Garcin

10:31 AM, 27th April 2015
About 4 years ago

I can't see any advantage on insisting on a new fixed term tenancy.
What lenders would want is that _any_ new fixed term tenancy allows for repossession under ground 2.

The generous conclusion is that this clause may be badly drafted.

Rob Crawford

14:42 PM, 28th April 2015
About 4 years ago

The lender is Leeds. My solicitor had a swift response from them when queried, "this document must be signed or the mortgage will not be agreed". "No one has objected to it previously". I have since discussed this with Leeds direct. Apparently it's to limit void periods, oh really! I have explained that during a fixed period if a tenant does not pay rent they would be more difficult to evict under a section 8 that can be contested than under a section 21 (accelerated) during a periodic. They are looking at rewording it to something that reflects that an agreement can go into a periodic. I have yet to see this, fingers crossed.

Rob Crawford

8:32 AM, 10th May 2015
About 4 years ago

Just to conclude this article. The building society did not back down from requiring that the document be signed as written before completion. I therefore adopted a different tack and asked them if an interpretation, that permitted periodic terms between the fixed terms, was correct. They have responded with a yes. I do find it strange that none has questioned the wording previously!

Romain Garcin

10:52 AM, 10th May 2015
About 4 years ago

Reply to the comment left by "Rob Crawford" at "10/05/2015 - 08:32":

"They have responded with a yes"

It means that they do not want a new fixed term tenancy. They just want that if you create a new fixed term tenancy it must include a ground 2 notice.

That's terrible drafting for something which is standard.


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