Tenancy Restrictions Imposed by Mortgagor

by Peter Jones

15:48 PM, 16th April 2014
About 7 years ago

Tenancy Restrictions Imposed by Mortgagor

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Tenancy Restrictions Imposed by Mortgagor

The Coventry Building Society is currently offering an attractively priced BTL mortgage deal (3.55% variable with a £999 arrangement fee) but a condition is that they do not allow the tenants to be friends sharing even if they sign a joint AST. Tenancy Restrictions Imposed by Mortgagor

As a, soon to be, new landlord I don’t want to burden myself with problematic restrictions before I start and therefore spoke to local lettings agents, who have not encountered this stringent restriction before, but were confident they could find “acceptable” couples or families with a potentially slight delay in the process.

I spoke to 3 advisors at the Coventry one of whom told me that there was little, but still some, scope for the underwriters to waive this restriction but couldn’t elaborate much on the reasons. I intend to invest in the London commuter belt and would personally prefer sharers to be professional self funders but wondered whether anyone else had experience of the Coventry, or any other cautious lender, waiving this requirement?

Thanks

Peter



Comments

Mark Alexander

15:54 PM, 16th April 2014
About 7 years ago

Hi Peter

What a stupid rule!

What if the sharers are not freinds but subsequently become friends as a result of sharing?

I consider my wife to be my best friend so does that mean we couldn't rent a property if the mortgage was with the Coventry either?

I would love to see the mortgage condition in its entirity but from what you have said I can't possibly see how they might be able to convince a judge to grant a posession order if it was breached.

What if the tenants live in separate rooms and never speak to each other, i.e. they "send each other to Coventry?" BOOM BOOM 🙂 LOL
.

Peter Jones

16:06 PM, 16th April 2014
About 7 years ago

Reply to the comment left by "Mark Alexander" at "16/04/2014 - 15:54":

I'm equally confused and also wonder how they can actually enforce it. What if a married couple divorce but stay friends, although it might be a preference, are they both obliged to move out.

I had imagined that this sort of risk was the landlord's concern but Coventry blame their underwriters, who presumably underwrite but never befriend, other lenders as well.

David Lawrenson

16:22 PM, 16th April 2014
About 7 years ago

Sometimes it really is hard to fathom or comprehend the utter stupidity of some mortgage lenders.
This restriction makes no sense at all - and I cannot figure out why they should have it as a requirement.
I can only put this requirement down to a failure to understand our marketplace.
Have you asked them why they have such a requirement - what is the thinking behind it.
You can tell them that experts like Mark and I find it incomprehensible. But what would we know!

Mick Roberts

16:30 PM, 16th April 2014
About 7 years ago

I han’t posted for ages, as haven’t had time for the abundance of follow on replies we get afterwards.

But I have to say my bit here. I can see where they are coming from, because in my experience, those that come & say mates, & share, few months in, normally on law of averages, they fall out, his cornflakes, the others beans, one’s not tidying up, one cleaning toilet, one bringing girlfriend back, other can’t sit on settee, gets confined to upstairs etc.

And one then leaves, other remaining can’t afford the WHOLE rent on his own, he not prepared to share with someone he knows.
This does happen, so don’t slate me for the above, I have experienced it many a times, so really do avoid mate sharers, unless good income which will account for the forthcoming hassle.

So maybe Coventry have some experience of this?
I do know that Coventry do budge, as they did have rule of no more that 5 loans from them per Landlord, & I got 6 out them, so they could be flexible.

Steve From Leicester

16:37 PM, 16th April 2014
About 7 years ago

Reply to the comment left by "Peter Jones" at "16/04/2014 - 16:06":

I'm guessing the word "friends" is a bit of a red herring - essentially they're saying the property can't be let to "sharers" - only to a couple or a singleton.

That's one of those things that "might" sound reasonably sensible at first glance - the notion that a couple will be more stable tenants than two people sharing could sound logical to some people, as demonstrated by Mick above.

The trouble is that tenants are entitled to something called quiet enjoyment, which means that (even if we wanted to) we're not allowed to pop round every so often to check that they hang their dressing gowns on the same peg.

Are we really supposed to ask two ladies or two gents if they're gay or not - on the basis that if they're a gay couple it's fine, but if they're just friends it not.

Or indeed asking a man and woman viewing together whether they're more than just good friends.

David Lawrenson

17:14 PM, 16th April 2014
About 7 years ago

Reply to the comment left by "Mick Roberts" at "16/04/2014 - 16:30":

Mick, you do make a valid point there.

I have to say, I have two and three bed houses and far prefer a couple or couple with kids than sharers any time, partly for the reasons you state - less hassle, stay longer etc.

However, where I have to have sharers, what has happened when one leaves is this:
I tell the remaining one to get another friend in (usually works) or if no one available, to advertise on spareroom. When they find someone I explain what "jointly and severally liable" means (they need to trust each other), we do an inventory and the new "couple" sign a single AST with rent coming from one account only (how they divvy it up between them is up to them).

As another commenter said, how would I know that the two men (or women) that turn up are not gay and in a relationship. They could not really be and be lying to get the property! How would I know! Am I supposed to employ my gaydar?

To discriminate against them in such a way would (rightly) be illegal, which is further ammunition against the Coventry for having this daft restriction in place as a criteria.

Mick Roberts

17:27 PM, 16th April 2014
About 7 years ago

I ask if gay or lesbian. Only because quite often they’re embarrassed to tell me, but I can tell in their tone they are. I just need to know for Housing Benefit purposes.
And it don’t bother me in the slightest, as I think normally throughout my 16 year renting out career, I’ve always had at any one time a pair of gay chaps or lesbians-Again law of averages to the amount of houses there is.

I always make valid points ha ha. Sometimes controversial, but only controversial to those that haven’t had experience in what we are talking about.

Mike W

17:33 PM, 16th April 2014
About 7 years ago

The actual conditions on the Coventry BS website state in the BTL eligibility rules:

Properties must be let to a sole occupant or single family unit only, with the exception of student lets where a maximum of 4 students are allowed

It is rule the Coventry don't understand as I had a refusal on the grounds that the property was an HMO. But in Scotland any property where 3 or more unrelated individuals (including students) occupy the same property is an HMO in law.

David Lawrenson

17:38 PM, 16th April 2014
About 7 years ago

Reply to the comment left by "Mick Roberts" at "16/04/2014 - 17:27":

Mick,

You are probably right, these days it should not be an issue to ask.

I have no problem asking, the only thing that spooks me is I am worried that they may not like me asking (perhaps I worry unnecessarily!)

That said, I'm sure there are many people who would be uncomfortable asking this question - and it is no business of a building society to (effectively) force landlords to ask it.

Another own goal for the building societies and their adventures in buy to let - see also West Brom, Skipton, Manchester.
Lest we forget, the Britannia's cluelessness in buy to let (much fraud, much poor lending on duff new builds in places like Thamesmead) was in part to blame for Co-ops current travails, but that's another story.

David Lawrenson

Romain Garcin

18:44 PM, 16th April 2014
About 7 years ago

I'm not sure it is a good idea to specifically ask about the sexual orientation, especially if only asked to same-sex prospective tenants.
Considering that the issue is sharers v. couple, perhaps best to ask that. Moreover it can be ask equally to all prospective tenants to further ensure that there can be no question of discrimination.

As to 'friends', as it is essentially impossible to verify apart from having the tenants followed by a private detective, I would suggest that this is a completely useless condition.
It's already not straightforward to be sure whether a couple is an actual couple or just 2 person sharing.

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