Vital Contacts for LHA Landlords

50%? !!! That's a huge claim Ben, evidence please.

It was comprehensively researched by......er.......monks!!

I really don't know, however, I do question whether some of their strategies and the advice they are giving to landlords meet the FSA principles of Treating Customers Fairly and and the advertising principles of Clear fair and Not Misleading. Their policy on redeeming one account leading them to possibly call in all loans is worrying. I've spoken out many times about their Choices payment plan too. Will these tactics intensify with the pressure that's put on them? Will they dig deeper into their small print and apply their conditions aggressively? I wouldn't put it past them. There is of course something we can all hope for and that's that they will incentivise us to move. We've seen a bit of this as they've already offered to waive ERC's, which to people who are locked into a 10 year fixed rate can sometimes make sense, especially if they want to sell up. Of course what I would really like them to do is to incentivise me to leave them by offering me a discount, much like Edeus did with their borrowers. That might just be wishful thinking on my part though.

Assuming that we are talking about the same thing, BTL borrowers who let long term to Councils, I'd suggest less than 1%, i.e. 4.3 million PRS homes X 1% = 43,000. I'm sure you have better access to figures than I do. Many of those who do let on this basis will have every right to do so as they will be borrowing commercially (commercial mortgages) or possibly have no borrowing at all. I think it is very dangerous for Councils to promote these schemes to people with BTL mortgages without warning them of the possible dire consequences of potentially breaching their mortgage conditions.

If we are talking about BTL borrowers letting to private tenents in receipt of LHA on 6 or 12 months AST's then the figure will obviously be very much higher. Also, the mortgage conditions I've read are so dated I suspect they are unenforceable (not a professionally qualified legal opinion). I say this because most mortgage conditions say no DSS lets. Does such a thing still exist? If they mean their borrower is not allowed to let their property to a person in receipt of LHA then they should say that. I wouldn't be too quick to press them to do that though.

Prompted by your response Mark I just asked the head of our PSL team about lender permission and she said "All our PSL landlords have to have lender permission before we take their properties on".

So I asked about the 12 month lender covenant on most buy to let mortgages, given we usually look to take a property on, as tenant, for 2 - 5 years. She replied that she hadnt heard anything about that but we do insist on lender permission, so I asked what proof we used to verify that the people offering us their properties have permission and she said "The landlord tells us" hahahaha

Innocents abroad!!!!!!!!

It would be interesting to know what question they ask the landlords too. If they are asking "does your lender know that you are renting out the property" that might get a very different response to "do your mortgage conditions allow you to rent the property on a contract for more than 12 months". Most landlords would answer Yes to the first question and "dunno, I better check" to the second. If they are desperate to do the deal of course they may just tell lies which I appreciate isn't really the Councils problem until they fail to meet a mortgage lender or the place burns down or the lender finds out and decides to get aggressive about it.

I think everyone is acting rather coy about these circumstances.
The lenders know full well that hundreds of thousands of homeowners are letting their properties out without consent ot let.
Reasons are obvious,  if the lender is informed they are left with little choice than to institute their terms and conditions.
This means increased interest charges and coming off a beneficial residential mortgage.
This could effectively negate any point in a homeowner seeking employment away from their property.
Indeed they would be better of on JSA and thir mortgage interest being paid by the social.
No LL advises a lender that they have an LHA claimant if it specifies that the lender prohibits LHA claimants.
Not many PSL LL advise their lender that they have signed up to a 5 year lease.
I think Ben is correct.
If lenders were aware of these issues and enforced th mortgage t & c's 50% of LL would have to withdraw from the LHA market.
This would obviously cause mass repossessions.mass homelessness for LHA and former homeowners, massive increase in bad debt on bank balance sheets, requiring even more bail out money from the govt or less money for lenders to lend.
There would be massive increase in expenditure in council housing budgets, as they would need to find temporary accommodation which does not exist to the extent it would be required.
What should happen is ALL lenders should remove these stupid terms.
One should be able to change the status of the occupants of a property at any time of the owner's choosing without any effect on the existing mortgage product; unless the owner wished to change mortgage product.
This will NEVER happen as the lenders are stupid and greedy.
Therefore people are left with little choice than to lie.
The lenders know this and they prefer to be kept in the dark as then there is no obligation on them to take any action as they won't know anything, will they!?
Therefore let sleeping dogs lie!?

The lenders create those conditions for their own protection Paul, far from stupid. I agree that they choose to turn a blind eye when it suits them too, but what's to stop a change in that policy when it suits them not to? Bad bank has around 6 years to repay it's debts, what will happen if they are way off target with just two years to go? It could go thee ways 1) the way all good landlords hope, i.e. they choose to accept X pence in the pound from borrowers on the basis that that's a better deal than they can get from selling a wholesale lending book, 2) they get aggressive and turn to small print to recover every penny they can, 3 is a combination of both. In the meantime I suspect they will continue to 'survey' landlords in order to try to make their book worth as much as possible. I'd like every landlord just to hang on up them when theycall as no information devalues the baks assets making the book worth less on a whole sale basis. The other thing they will no doubt continiue to do if try to persuade people that it's a good idea to pay down their mortgages, even though in many cases that will be bad advice offered in isolation of all facts.

As a member of one MX I would be bankrupted and homeless if I was forced to clear my mortgages even though I have 20 year terms.
I have no chance of EVER obtaining a mortgage again so I cannot remortgage and I couldn't anyway unless property values shoot up, fat chance!.
As there are a lot of LL out there who are with MX it would be very useful to have advices from you and fellow professionals how we can stop MX bankrupting us.

On the point of lettingw ithout lender permission my experience is that the situation is simply the norm. I must advise 2 or 3 tenants everyday where they have got wind of immanent possession against their landlord and the lender knows nothing about it.

Similarly, and more surprisingly, in court borrowers will often try to mount a defence in court on the basis that they will rent out their property in order to meet mortgage payments and I have yet to hear a lender's lawyer or even the district judge raise the idea that they may be in breach of their Ts and Cs. The prevailing attitude being "As long as you can meet the payments".

I mentioned earlier that the practice is so widespread that a new law had to be brought in to deal with tenants that the lenders didnt know about and in my office we see so many tenants of defaulting mortgagors that we have a standard letter template to send to lenders letting them know about the tenants - its THAT routine