Piggybank News

August 5, 2011

Could your rental home be reposessed?

Filed under: Property — nspresources @ 12:19 pm
Tags: , , , , , ,

A recent case where a tenant found that his flat was under a repossession order a mere 3 days after moving in has highlighted an increasing problem in the current housing market.

I am personally aware of two other households in a similar position within Milton Keynes and sadly this is a pattern being repeated across the country.  There are many reasons why a landlord may have his investment property repossessed and by far the most common of these is actually rental arrears, which are on the increase.  Unfortunately however, there are also a large number of “amateur” landlords who were mis-sold investment property during the boom years and these individuals are generally far less able to cope when the going gets tough.

Whilst one naturally has  sympathy for investors placed in this position, some of whom have lost all their savings and their own homes into the bargain; it does nothing to help the tenants who find themselves obliged to move out of their homes.  The question therefore is how tenants can protect themselves from this.

Mr Hall, the tenant concerned in the most recent case, said he was “staggered” to learn that although he had to undergo credit checks by the letting agent, landlords are not vetted.  In his case the flat was already undergoing repossession procedures when his tenancy began and although he did receive back all his rent and the administration fees paid to a letting agent, there was no recompense for money he had spent decorating the flat.

The truth is that there is no standard procedure for vetting landlords, anyone who has a house to rent out can offer it to the open market, either privately or via an agent and no checks will be carried out on their financial position or even to confirm that they have permission from the mortgage provider to rent the property out. Having said that, the vast majority of landlords are decent ordinary people just trying to build a pension for their retirement or a college fund for the kids.  But how can a tenant tell good from bad?

One way to tell a good professional landlord is to check whether they are members of any of the landlords associations.  There are a number of these, both local and national, and most offer training and support to their members to ensure that certain standards are maintained and legal requirements met.  There are also a few “accreditation” schemes but these are not widespread and have mostly been instituted by local councils in areas where they perceive problems in the private rented sector. A professional landlord will not mind you asking a few relevant questions or looking at a sample tenancy agreement, after all you are entering into a business agreement with them.

Another good guide is actually the property itself.  Is it in good condition? Does it look like the maintenance has been done regularly?  Odd as it may seem, it is also a good sign if the landlord asks you, as a prospective tenant, to complete credit checks and conducts references – only landlords who are concerned about their property will take the time and trouble to do this.  If you are offered the keys on first inspection and after handing over a cash deposit then you should be extremely wary!

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