Tenant not paying but we are letting without consent on help to buy scheme

by Readers Question

10:56 AM, 1st February 2016
About 5 years ago

Tenant not paying but we are letting without consent on help to buy scheme

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Tenant not paying but we are letting without consent on help to buy scheme

My partner bought a 1 bed flat on the government’s help to buy scheme a couple of years ago, and almost immediately we found out we were pregnant! We continued to live there during the pregnancy and for a while after the baby arrived, but it was just too small for the three of us so we had to find somewhere else.trouble

On the scheme you’re not supposed to rent the property for 5 years, but my partner didn’t want to lose the asset, so she decided to take the risk and rent it without telling the lender.

Problem is, now we have a tenant who hasn’t paid rent for two months and is refusing to leave (for the time being at least). He claims he’s fallen on hard times and has nowhere else to go, and he may be telling the truth (it’s not clear). But bottom line is we need the income to pay our own rent, so we need him out asap.

We’re currently talking to solicitors, but I suppose our main concern at the moment is whether getting him evicted is likely to drop my partner in hot water for renting without consent.

Any help would be greatly appreciated!


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Luke P

15:10 PM, 2nd February 2016
About 5 years ago

@Alan (OP),

Please do come back and give us your thoughts and feelings now that you have had a few responses.

I'd be interested to hear how you view your predicament now.

Do you think it is fair that you retain the asset on the back of a Govt. scheme (ultimately paid for by the tax payer)?

In some respects I do blame the Government for not having plans for these (inevitable) eventualities. Those using H2B are likely to be at a time of life when they're thinking about starting a family and therefore could easily 'out-grow' their H2B property. What provisions were put in place?

Gary Dully

16:34 PM, 2nd February 2016
About 5 years ago

Hello Alan,

Welcome to the crazy World of non paying tenants!

You are now a fully paid up member of the being legally mugged by a tenant club.

Your tenant hasn't fallen on hard times, they have simply decided not to pay you a dime until one of you drops financially dead!

Issue a Section 21 notice, if they have been a tenant for at least 4 months and you have protected their deposit properly.

If your tenant has not paid for at least 8 weeks or 2 months rent, issue and correctly serve a Notice Seeking Repossession (Section 8 Notice), on grounds 8,10 & 11 and then promptly after that notice period expires issue court proceedings against the tenant.

Make sure you send rent reminder letters or you will breach their rights under the CPR ( Civil Procedure Rules).

Then on the day of the hearing, wear 2 pairs of underwear as they may get free legal representation, but if they have maintained the arrears over 8 weeks in total, the judge will listen to their bullshit and should still grant you possession anyway.

Then wait another couple of weeks they will be granted to leave and then if they haven't budged, apply for a bailiff to evict.

If you are lucky you should get a bailiff within a couple of months, who for a fee will come around with little briefcase and locksmith and force your tenant to leave.

You will probably be going through this process for about 5 months from start to finish.

If they have a guarantor, I would warn them, In writing, that they will be paying the bill and receiving a summons at the same time.

Your bank will not get involved - they know to leave well alone with evictions.

All the forms are available on the courts website site and once you have done one case you will be an expert in the side effects of adrenaline poisoning and laundry stain removal.

Anyway, best of luck

Mark Alexander

16:43 PM, 2nd February 2016
About 5 years ago

Reply to the comment left by "Adam Davies" at "02/02/2016 - 13:00":

Brutal or not, consent to let should have been requested from the lender. The fact it hasn't been is sure to breach mortgage conditions.

If this tenant decides to be awkward and to seek help from the likes of Shelter then one can expect this to be discovered and used as a defence, if only to cause trouble.

The mortgage lender would be well within its rights to call in the loan.

In summary, consent to let should have been requested from the mortgage lender, and if applicable the freeholder because letting without consent and proper referencing can cause problems with a freeholders insurers. If consent is declined then it can be appealed. Until consent is granted it is wrong to let a property.

The H2B issue just makes it worse.

Ray Davison

18:14 PM, 2nd February 2016
About 5 years ago

As far as being brutal is concerned, we as professional Landlords are being used by the government as tax providers to fund the H2B schemes so is it any wonder that we may feel a little sensitive when someone raises this scenario?

Michael Barnes

10:48 AM, 3rd February 2016
About 5 years ago

I have been trying to find the penalties for this situation.

I have found reference on Government pages to it being criminal, but I cannot find any details.
Does anyone know the legislation that defines this?

Charles King - Barrister-At-Law

11:39 AM, 3rd February 2016
About 5 years ago

(1) Gary: we are all being legally mugged - by the banks: and I don’t know how anybody can say someone hasn’t fallen on hard times without knowing the individual circumstances. There is a housing crisis on the back of a financial meltdown. If someone hasn’t any money then they cannot pay their rent no matter how much they want to, or how much hardship it causes their landlord. Being a landlord is a seriously risky business and there is only so much we can do to protect ourselves against it, as with any business. The fact that people sometimes don‘t pay when they are supposed to has been at the heart of the economy since money was invented (and probably since before then). Obviously the situation is greatly exacerbated where the landlord is themselves at risk of losing the property to – oh yes - their lender. If a mortgagor falls into arrears the amount of legal costs the lender can typically add, perfectly legally and contractually, is utterly breathtaking, and usually wholly out of proportion to the amount owed. These bankers’ charges are a real scandal, and there is no political will to change the situation (the reason being the politicians are in thrall to the bankers). The housing benefit system is an absurd partial answer to the modern problem of high rents caused by over-lending.

(2) Ray: we are all subsidising high rents through taxation via housing benefit. Some of us are benefitting from that situation.

(3) Mark: if you know of a defence to possession proceedings based upon the conditions of the landlord’s rights of occupation please share! If Shelter could have brought such a case they would have done so. They certainly haven’t (yet). The status of the landlord has no bearing in an action for possession by that landlord against their own tenant. Even a licensee can grant a lease (a ‘tenancy by estoppel’), even though they have no interest (such as a freehold, or superior lease) out of which they could grant a lease. It’s a fascinating area of law (see for example, Bruton v London and Quadrant [1999] (which I now see even has it’s own Wikipedia entry)). I’m pleased that this site allows us to discuss things like this.

(4) Michael: I’m no Crown Prosecutor, but the offence is likely to be s.3 Fraud Act 2006. For that to apply there would have to be ‘dishonesty’. Don’t get me started on that! The legal definition of dishonesty is so vague that I’m amazed that there are any convictions at all.

Please don’t be offended by anything I say: it’s all in the spirit of open debate, and these issues are all of crucial importance to the quality of the lives of landlords and tenants. It’s good to have such a forum.

Alan Christmas

14:05 PM, 3rd February 2016
About 5 years ago

Wow, thanks for all the responses! They’re all greatly appreciated – even the unsympathetic ones! – it’s a great help to have other people’s input and advice on this.

First of all, an update on our situation. Our tenant’s claim has been that they can’t move yet because although they have found somewhere to move into they can’t afford the deposit etc. right now. So, we’ve offered to simply release the deposit (so they have money to move) and call it quits on what they owe in return for them signing a deed of surrender and leaving in the next week. Obviously this probably means that we will be out of pocket (I say probably because they still insist that they intend to pay the outstanding rent when they can), but it will be worth it to have the situation with them resolved. We will continue to progress along the eviction route in the meantime, just in case they pull out of this arrangement, but hopefully we won’t have to pursue that to completion.

On the broader issues: first of all, I’m very sorry if others feel that our actions negatively impact on them, and tarnish their reputations as landlords. We are landlords by mistake, as it were, and we wouldn’t have joined the community if our circumstances hadn’t dictated it. I respect the fact that for others it’s a profession or source of livelihood, and I understand the responses of those who have more invested in it (in more than one sense) than we do.

I should clarify that apart from the situation with the lender everything else has been done in proper way. The deposit is properly protected, a standard tenancy agreement has been signed by both parties, the council tax is in the tenant’s name, etc.

On the question of fairness: I suppose we feel that we have complied with the spirit if not the letter of the H2B scheme. My partner didn’t set out to game the system. She bought the flat intending to live there, because the scheme offered her an opportunity to get onto the property ladder which she wouldn’t have had without it. She played her part in stimulating the market, and she benefited from the incentives on offer. She/we would still be living there now if it wasn't for our circumstances, and would probably have done so for the full initial 5 years.

I can only suppose that the restrictions on letting H2B properties are in place to prevent people from using the preferential rates as a way to simply make money, rather than genuinely find a first home. Again, my partner’s intention was to use the property as her home, and even now once mortgage, ground rent, management costs etc. are all factored in she doesn’t make any money from letting it.

As I understand it, part of the point of the H2B scheme was to address the problem of too many people being unable to enter the property market. The scheme worked perfectly well in terms of allowing my partner the opportunity to do so. It therefore seems somewhat perverse to think that simply because of our unexpected family situation she might have to give up the property and return to being part of the problem that the policy was (in part) intended to address.

Having said all that, after this experience we will certainly have to look again at the options for converting the mortgage. However, my partner’s understanding was that it would involve paying back the government loan in full and re-mortgaging at 95%, and in that scenario we simply couldn’t afford it, so we would have to give up the asset.

Thanks again for all the responses.

Luke P

14:27 PM, 3rd February 2016
About 5 years ago

Reply to the comment left by "Alan Christmas" at "03/02/2016 - 14:05":

Hi Alan,

Great to see that you've come back...and very much into 'the lion's den' for you, so praise to your braveness.

Just out of interest, and no malice intended, why would giving up the asset be a problem? I think I already know, but was curious as to the psychology behind your thinking.

Alan Christmas

15:08 PM, 3rd February 2016
About 5 years ago

Hi Luke,

I'm having to speak on behalf of my partner here, so I can't really give a definitive answer. But I suppose it really comes down to the fact that she sees the property as an investment. If she were to sell it, then it's unlikely that she/we could afford to buy another property any time soon. Whereas, if she can meet the repayments for the rest of the intial five year period, then she will have been able to acquire a sizeable chunk of the property at a very good rate, and will be in a good position sell up and invest in something more suitable for us.

It also helps that it's a brand new flat in a good location which is undergoing fairly sustained development, so we're fairly confident that this property in particular is a good investment.

Michael Barnes

14:17 PM, 4th February 2016
About 5 years ago

Reply to the comment left by "Alan Christmas" at "03/02/2016 - 14:05":

What I have gleaned from trying to find out about the H2B scheme appears to be (I think)
1. If you pay off the government's contribution, then there is no criminal action if you let the property, but you should get lender's permission to let ( not to get their permission would be unlawful, meaning they can take civil action against you, but not criminal prosecution).

2. It is not limited to first purchase, so should be able to sell one property and buy a replacement with H2B.

However, I could be wrong, and if I am, then someone will correct me, I'm sure.

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