Rental restriction placed in title deeds

Rental restriction placed in title deeds

13:10 PM, 10th February 2014, About 10 years ago 40

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In 2012, I bought my first house from Places for People – long story short, I am now looking to move in with my girlfriend to her house and rent my property out. Therein lies the problem. In my Title Deeds, Places for People have included a restriction that states that I may not rent my property out (you know, the house that I own…through my mortgage of course). I am aware that this is something I should’ve checked prior to purchasing the property however at the time, I bought the property (with my ex-gf) with a view to it being a long-term family home…no such luck!

Since September I have been trying to get this restriction removed from my Title Deeds. Having spoken to Places for People, they have agreed that I may rent my house out although I need to go through THEIR letting agents. This isn’t the end of the world, but I just annoyed that I am still bound to them! Rental restriction placed in title deeds

Today I have found out that they aren’t going to be removing the restriction from me Title Deeds but have provided me with a letter that states “In order to progress your application for a licence to sublet, I would be greatful if you would complete and return the attached form. this will then be considered in line with our policy, if your request is approved then there is a charge of £250.00 including VAT for the preparation of the licence that is required for you to sublet. If a licence to sublet is issued this will be for a period of 24 months with a need to be renewed after this time…”

The question I’m really asking, is a) how do hey get away with including those sort of restrictions in the Title Deeds of a property and b) are they within their rights charge me £250 bi-annually for a “licence” to rent my property? They have stated that as they are the beneficiary of the restrictive covenants, they grant a licence to “sublet or underlet” my property to ensure that any tenants I have abide by the restrictions set out in Title Deeds.

Any help or advice here would be very much appreciated!

Thanks

Dan


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Comments

Daniel Ramsell

10:59 AM, 11th February 2014, About 10 years ago

Reply to the comment left by "Mark Alexander" at "11/02/2014 - 09:57":

Looking at it realistically, I'd come out with around £26k which would not be enough to go down that route - I have asked the question of my existing lender for information purposes anyway and as a last resort I will see if this is something I could pursue.

Daniel Ramsell

11:08 AM, 11th February 2014, About 10 years ago

This Mark Smith you speak of, is that Mark Crampton-Smith? (Just so I contact the correct mark Smith 😉 )

Mark Alexander - Founder of Property118

11:30 AM, 11th February 2014, About 10 years ago

Reply to the comment left by "Daniel Ramsell" at "11/02/2014 - 11:08":

No, it's Mark Smith (Barrister-At-Law) - see his member profile here >>> http://www.property118.com/member/?id=1945
.

Neil Patterson

15:22 PM, 11th February 2014, About 10 years ago

Just as a bit of perspective to the thread.

I am correct in understanding from page 2 that Places for People put up 25% of the purchase price, 75% was borrowed from the bank and no deposit was put down?

Daniel Ramsell

15:48 PM, 11th February 2014, About 10 years ago

Reply to the comment left by "Neil Patterson" at "11/02/2014 - 15:22":

Hi Neil,

That is correct. 25% equity loan from places for people and 75% mortgage with 0% deposit.

Neil Patterson

16:23 PM, 11th February 2014, About 10 years ago

Thanks Daniel,

Now I understand their perspective and why they would have the restrictions.

If you consider it a little like a council right to buy where there is a 3 year period normally where you can not borrow more money, sell to make a profit or convert to a Buy to Let. That is because the idea is to provide affordable housing not to make a profit at the Councils expense.

I suppose in this scenario Places for People have taken all the risk financially in the outset and would want it's risk used for the purpose intended.

The bad news is that understandably they may not be happy with the outcome.

The good news is that it is definitely not in their interest to put you in a financially precarious position as they stand to lose most as I am guessing the mortgage company will have the first legal charge.

It is very unfortunate that your circumstances have changed and having worked in the industry for 20 years it is much more common than people realise when they first take out a commitment.

I am hoping that if you can get a face to face meeting with them, understand their perspective, but work towards a mutually common goal you will get better results than trying to take them to task. There will always be some common ground you can work on.

I really hope that helps.

Daniel Ramsell

9:14 AM, 12th February 2014, About 10 years ago

Reply to the comment left by "Neil Patterson" at "11/02/2014 - 16:23":

Thanks Neil. I do get the feeling that I am going to have to suck it up and pay the licence fee. I need to rent my place out sooner rather than later, so I may pay it up front and see what I can do about getting the fee reduced.

Thanks for all your advice everyone, I will be investigating further avenues and will update you as and when I have anything resolved.

Mark Alexander - Founder of Property118

9:46 AM, 12th February 2014, About 10 years ago

Reply to the comment left by "Daniel Ramsell" at "12/02/2014 - 09:14":

Good luck Daniel and I look forward to reading about the outcome.
.

Jeremy Smith

11:18 AM, 12th February 2014, About 10 years ago

The story turned to reveal a different perspective !

So, they've put this "restriction" on it since they are 25% owners of your property.

If you were to buy them out, will the restriction be lifted, or does it now stay for ever?
- It is an interesting way to gain a passive income from many properties without continuing to own them !

If they will relinquish the restriction, perhaps you could look to remortgage, if the value has increased, perhaps, or find funds from somewhere else, if you can.

Although the cheapest way is just to pay the licence fee they are asking for for the moment.
-Perhaps with the new rental income you can put it all to one side to buy them out later.

Daniel Ramsell

12:45 PM, 12th February 2014, About 10 years ago

Reply to the comment left by "Jeremy Smith" at "12/02/2014 - 11:18":

I'm not entirely convinced the restriction is in there due to the 25% equity loan. I have queried this previously and been told it is nothing to do with the equity loan. If the equity loan is paid off, the restriction will still remain in the title deeds.

Places for People do a lot of rental themselves - this clause I believe is to restrict their competition within their developments (*assumption).

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