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TODAY'S OTHER NEWS

Tenants should ask landlords if they’ve had mortgage holiday - expert

The boss of a company that manages thousands of properties across the UK claims some tenants should be able to ask if their landlords have had a Coronavirus mortgage holiday - and should get a rent cut if the answer is yes.

Mary-Anne Bowring, group managing director at Ringley, says tenants who are out of work and struggling on reduced incomes should be able to ask if their landlord has secured a mortgage repayment, interest or repayment-and-interest holiday. 

In March the government announced landlords can apply for a three-month mortgage holiday if tenants are struggling to pay rent. And to help renters further, the government has banned eviction proceedings from happening and urged tenants to work with their landlord in situations where they are struggling to pay rent.

“The government has moved decisively to help protect tenants and landlords, but it is inevitable some households will fall through the gaps as the various income support schemes get up and running and payments are processed” says Bowring.

“Transparency is key, and renters have a right to know if their landlord has benefited from a mortgage holiday and if they are struggling financially should be able to request a reduction in rent” she continues.

“Any rent reduction must be conditional on being able to prove financial hardship to prevent abuse and it is important tenants and landlords work together during this uniquely difficult time. What is important is that the government doesn’t effectively pay out twice.”

  • James B

    Assume he means deferral in rent ? As the landlord need to pay anything back also

  • dale james

    It has to be deferral, also do we tell the tenants that, as our subsequent mortgage payments will increase their rent will too? (Please be aware that any officially agreed deferred rent is not 'legally due' and will not count towards S8 arrears calculation) - to quote Hill Street Blues ...let's be careful out there!

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    • 29 April 2020 08:53 AM

    If a tenant asked me if I had a mortgage I might be able to obtain a mortgage holiday on I would advise the tenant to mind their own f#####g business.

    The only part of my business that a tenant is permitted to know about is the provision of the service that the tenant is paying rent for.
    HOW I provide that service is my business only.
    All a tenant has to do is pay the f####g
    rent as per contract.
    I don't ask Sainsbury's how they finance the food I buy from them and could I not pay for it if they receive Govt assistance

    PossessionFriendUK PossessionFriend

    Quite right Paul,
    The extra interest and credit damage to the Landlord is simply not going to be, nor is capable of being restored.
    Some lenders are telling landlords that if a landlords applies for a mortgage deferment, that lender will Not advance them any further mortgage products.
    Totally not thought through by the Govt and only advanced as an appeasement for throwing Landlords under the bus [again] to pick up shortfalls in rent.
    Govt have done nothing less than sequestrated private property. How any landlord can justify this, let alone a so-called Landlord Association ( NRLA ) is beyond belief.
    Look what happened last week when Govt introduced restriction on Commercial landlords foreclosing on leases, Today, the British Property Federation are having talks with Govt - seems to me that landlords would be better represented by the One body ( without distinguishing residential or commercial. )

     
    icon

    Sound like a lovely bloke

     
  • Matthew Payne

    The key here is the language used and whether it is deemed a landlord has provided consent to anything that might be described and then later misconstrued as a holiday, a deferred payment, a reduction etc and what the implied terms might be. Any shortfall needs to be treated and documented in the same way any normal arrears would be.

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    If I take a mortgage holiday that’s confidential between me and my mortgage lender and does not involve my tenants. Like Paul any tenants asking would politely be told to F off.

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    Lovely

     
  • Neil Moores

    I think it is perfectly acceptable to let tenants know if you are taking a mortgage holiday. Although I would emphasis "taking a mortgage holiday" over "applying for one". The government has advised that Landlords are allowed to REQUEST a 3 month mortgage holiday, not guaranteed to receive one. Typical government confusion in my opinion. I had not realised that I was ever NOT allowed to apply for a mortgage holiday. I assume that you can ask your lender for anything you want, and they can refuse or accept your request. I do, however, disagree with Mr Barrett's suggestion that it is none of the tenant's business if they have a mortgage deferral as the Tenant has a contractual obligation to pay rent in full. The landlord has a contractual obligation to pay his mortgage in full so if he is granted a mortgage deferment for 3 months to allow for difficulties in collecting rent in the current crisis then it seems fair to me that his tenant should know this when he is being considered for a similar arrangement over his rent.

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    Sorry to disagree, but it is none of the tenant's business. You are talking about two separate contracts:
    Contract 1: Landlord contracts with mortgage company to pay the mortgage etc
    Contract 2: Tenant contracts with landlord to pay rent for the property and the landlord agrees peacuful enjoyment and to maintain he property etc.

    There is no right to know how the landlord financed the purchase.

     
    S l
    • S l
    • 29 April 2020 18:26 PM

    Please dont forget that if Landlord get a mortgage holiday and have to pay extra interest for extra 3 months, if tenant wants to know, tenant should also be made liable for the extra interest charge to the landlord for applying for mortgage holiday.

     
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    • 30 April 2020 02:32 AM

    Absolutely incorrect.
    It is none of the tenant's business how a LL provisions the service that the tenant is being charged rent for.
    The tenant is obligated to pay rent irrespective of what assistance Govt or lenders might give.

    What makes you consider that a tenant has any right to know the private business of a LL?
    Of course if the LL wishes to share personal financial details with his tenants that is his prerogative.
    But NO tenant should ever expect a LL to discuss any business of the LL.
    There are many aspects of my business that I would never have wished to share with my tenants.
    Possible mortgage deferment would simply be just another one of these aspects.

    I suggest to you that you keep your private business affairs PRIVATE!!

    Sharing confidential information with tenants is most unwise.
    You should accept that your business judgement is flawed.
    Best advice is to keep your affairs to yourself.

    Obviously LL fora such as this site are useful to discuss one's affairs.
    Most tenants are too thick to bother reading LL fora where they find out what their LL is up to.
    But a general principle it is most unwise to share any aspects of your business with tenants.
    Your prime responsibility is to just provide the service the tenant is paying for.
    Keep your relationship with the tenant restricted to that.

     
    S l
    • S l
    • 30 April 2020 18:38 PM

    And who will pay the extra 3 months interest that the mortgage company continue to charge the landlord in the event they allow the mortgage holiday?
    Likewise, the tenant will still have to pay the 3 months rent plus interest as per their ast contract

     
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    So a self-styled expert dows not understand that a mortgage holiday is not what it sounds like. Payments are simply suspended wth interest still accruing and payments either increasing or or the payment period to be extended. The money STILL HAS TO BE PAID.

    As others have said, my finances are MY BUSINESS and nothing to do with the tenants. NO doubt SHelter, who do not shelter anyone, will pick this as their next campaign - tenants must have the right to see the landlord's finances regarding the rented property. ONly joiking - I hope.

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    A landlord would need to be provided with proof by the tenant that they are unable to pay the rent to be able to try and get payment deferment on a BTL mortgage. That could be in the form of a letter from their employer about being furloughed, bank statements, confirmation that they've applied for universal credit etc. There's quite a few of the BTL lenders have said they won't be giving mortgage payment deferrals.
    And what's the advice if the landlord isn't able to secure one? It could be that the landlord chooses to pay the mortgage even if they aren't getting the rent from the tenants. To be fair it's not really any of the tenant's business what the landlord has or hasn't done!

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    What right does a tenant have to weather or not I have a mortgage or a mortgage holiday it’s information they have no right to know or need to know

  • Philip Drake

    I believe the tenant has a statutory right to know if there is a mortgage on the property that is being let. Indeed this information must be included the AST.

    S l
    • S l
    • 29 April 2020 18:22 PM

    In that case, landlord has the statutory right to know if the tenant's income and saving in his account as it affects the rent. Indeed this information must be included in the AST as well.

     
    PossessionFriendUK PossessionFriend

    No, Philip that's not the case. Look at the landlord Associations AST, Shelter's ( hiss, spit ) web site. Nowhere is that mentioned.

     
    Matthew Payne

    Yes and no. The tenant doesn't have the right to know, but if the TA is drawn up correctly, there should be a Mortgage Ground II clause which basically gives the lender ultimate authority to repossess and is giving the tenant notice of that from the start. If the clause is there, that is informing the tenant of their right to repossess and the risk that poses. If the clause is absent either there is no mortgage or whoever created the TA has failed to add it, which could then compromise a lenders rights and have implications for the landlord who may just want to hand the keys back.

     
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    • 30 April 2020 02:56 AM

    Absolute twaddle you talk.
    There is no part of an AST where there is ANY requirement to provide ANY details of how the property has been financed.
    One aspect which I would contend is appropriate is to show a tenant the front page of the title deeds with the LL name.
    I do this for new occupants to assure them that I own the property.
    I also show them my relevant ID.
    If a tenant wishes to find out further details of the rental property they may easily do so as such information is in the public domain.
    All the tenant has to do is pay £3 to Land Registry and the title deed information will be provided.

    Now it could be that the tenant ascertains that the LL has a residential mortgage and may contact the lender to ascertain whether CTL has been granted.
    If not then that would cause a whole load of problems for the LL.
    I have never had any tenant check with LR my ownership or status of any property I owned.

     
  • icon

    What a stupid and ignorant idea. Firstly, it's none of the tenants' business. Secondly, a mortgage holiday is nothing more than additional borrowing to effectively pay the interest due. An increased balance means more interest charged over the mortgage term so in theory it actually costs landlords more.

    S l
    • S l
    • 30 April 2020 18:36 PM

    But if shelter and the likes of them in the parliament makes enough noise, it will still go on to be the law and then we minute little PRS have to spend thousands to go to court to battle it out.

     
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    • 30 April 2020 03:07 AM

    @ matthew payne
    You are simply incorrect.
    A lender will have 1st charge over a property and NO rental agreement can EVER prevent a lender repossessing if they wish.
    A lender can call in a loan ANYTIME they like if they consider a breach of mortgage conditions has occurred.
    It doesn't matter. what any tenancy agreement states or doesn't state.
    1st charge trumps everything.
    Such a mortgage clause as you mention need be nothing more than a generic term in a AST.
    But it isn't needed and it doesn't need to relate to any particular mortgage that may be in place on the property.

    PossessionFriendUK PossessionFriend

    Mathew, its a little semantic, if I may say. The small part of the truth in 'should there be a clause in a AST about property being subject to a mortgage' only means that, if there is, - and the Lender repossesses from the Landlord ( at which point its of no interest to the Landlord ) then in any Possession proceedings commenced by landlord, Mortgagee is entitled to possession.
    If there isn't any 'clause' Tenant becomes a tenant of the Mortgagee and Mortgagee has to commence separate Possession proceedings. ( which is why some mortgage companies used to insist as part of their mortgage terms of lending, that a Landlord was to always include that term in any Tenancy agreement. ) It was never a 'Legal requirement'
    Hope this helps and clarifies the matter.

     
    Matthew Payne

    I didnt say it would prevent the lender repossessing if it wasnt there. I didnt say it was a legal requirement. It could compromise a lenders rights to sell the property immediatley if absent and therefore there are implications for the borrower.

    Most mortgage offers detail that any additional costs in the lender exercising their rights caused by the borrower are the responsibilty of the borrower, and possibly delaying the lenders ability to sell the property with vacant possession might create additonal cost which is not in a landlords interests.

    It is certainly good practice to include and if the government makes any moves towards assured tenancies then every lender in the land will insist once more that this clause is included and flashing red and making a noise in every TA so everyone knows it is there. (I was just pointing out to Philip that this is one way a tenant can learn the property is mortgaged but they have no right to know.)

    It is not a standard clause it is usually added on page 16/17 in addtional clauses, and I am not sure why any landlord or agent would not add it for the sake of completeness to reduce risk, however small that may be.

     
    S l
    • S l
    • 30 April 2020 21:17 PM

    Fyi, now quite a few lender, when we remortgage a btl property, their pre requisites is to see the current ast agreement and it must have the repossession clause in it before the mortgage company agree to sign or release the new mortgage loan.

     
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    Firstly, can I say I am so glad I am no longer in the PRS. The reason I left was the gross unfairness to landlords coupled with the increasing liabilities (tax and other) being piled upon us. I didn't have any right to ask about my tenants affairs, or indeed, whether they were a couple (they were) and whether one of the so-called co-habiting 'friends' could claim HB. I'm glad they left. I'm sure I'd have been saddles with the bill for their fraud. I was not allowed to ask anything, access or ask for rent if it was late and if I asked more than once, well that was harrassment. Tenants should not be able to ask about my finances. I didn't have a mortgage but never let on. Or I'm sure the tenants would have been even more calicitrant than they were. They complained about everything so I called the council to inspect! House was in great condition apparently. Letting tenants invade the privacy of their landlords would be shocking. I'm sure they'd be up in arms if they had to declare their finances like this. If you are not eligible for HB, then you should pay as you presumably have at least 16k. End of.

  • icon

    Guess its because rent payments are always more than mortgage eh??

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