Sneaky Landlords

[Maylix]

Hi
About 12 years ago, when I was last thinking of renting a property to live in, one of the scare stories that was doing the rounds was Landlords who would let you their property under an AST, but unbeknownst to you they were behind with their mortgage payments, so the property would get repossessed, say 1 month after you moved in and you (the renter) would have to vacate the premises. Obviously causing massive inconvenience, and loss of any rent paid in advance.
I'm looking at renting again, and for various reasons the estate agent is asking for 6 months rent up-front. But they assure me that my scenario couldn't happen because 'they vet their landlords and wouldn't take on anybody in that situation', but of course they're not willing to share any of their 'vetting' results, and anyway I don't believe them.
They also say that tenants rights have strengthened over the last 12 years, and I would not be kicked out if the house was repossessed anyway. Whilst I'm anecdotally aware that tenants rights have increased, I'm not sure if they have in this particular area, and without specifics I'm worried about possibly losing 6 months rent.
Does anyone have up-to-date knowledge on this scenario, whether it's still a possibility and if so any steps that I could take to minimise my risk?

TIA
Maylix

[Lootman]

the property would get repossessed, say 1 month after you moved in and you (the renter) would have to vacate the premises.

Whilst I'm anecdotally aware that tenants rights have increased, I'm not sure if they have in this particular area, and without specifics I'm worried about possibly losing 6 months rent.

Repossession is really just like any other change of title, as happens more commonly when a property is sold to anther party. In those situations nothing changes for the tenant upon completion of the transfer. The terms of your lease remain the same, except that you now pay your rent (same amount) to a new owner who will identify themselves to you for that purpose.

Also upon any change of title, any monies you paid such as a deposit or rent in advance, gets credited to the new owner and remains their liability to you.

It is entirely possible that the new owner will be OK with having a renter there and so, if you are in good standing, nothing may happen, at least until the termination of your AST. But even if the new owner wants you out, there is a legal process to go through that takes weeks or months. Since you (presumably) only have a 6-month AST I do not know why any owner would bother. To get you out before the end of the 6 months would require cause i.e. you breaking your lease in some way.

I have both bought and sold buildings with tenants in them and it has never been a problem either for me or them. In one case I gave notice at the end of the AST but that was it.

[GoSeigen]

Hi
About 12 years ago, when I was last thinking of renting a property to live in, one of the scare stories that was doing the rounds was Landlords who would let you their property under an AST, but unbeknownst to you they were behind with their mortgage payments, so the property would get repossessed, say 1 month after you moved in and you (the renter) would have to vacate the premises. Obviously causing massive inconvenience, and loss of any rent paid in advance.
I'm looking at renting again, and for various reasons the estate agent is asking for 6 months rent up-front. But they assure me that my scenario couldn't happen because 'they vet their landlords and wouldn't take on anybody in that situation', but of course they're not willing to share any of their 'vetting' results, and anyway I don't believe them.
They also say that tenants rights have strengthened over the last 12 years, and I would not be kicked out if the house was repossessed anyway. Whilst I'm anecdotally aware that tenants rights have increased, I'm not sure if they have in this particular area, and without specifics I'm worried about possibly losing 6 months rent.
Does anyone have up-to-date knowledge on this scenario, whether it's still a possibility and if so any steps that I could take to minimise my risk?

TIA
Maylix

Okay, let's get a few things straight!

1. Your contract will not be with the agent but with the landlord.
2. On top of the contract there is a variety of statute (law) governing ASTs, most of it providing pretty good protection for tenants.
3. You can assume that agents on the whole are crooks. Don't trust them as far as you can throw them. Landlords are a bit better but often refuse to engage with their tenants. This leaves the tenants at the mercy of the crooks.
4. Since the banning of tenant fees the power balance between tenant and agent has evened up. Fight your corner!

As for your personal situation, handing over six months' rent is a huge risk. If you agree to do so make sure you get EVERYTHING in order in advance. Have a solicitor look at the contract. Fight over every little thing you disagree with in the check-in inventory/report. Bargain down the rent a bit in exchange for the six months up front. Don't necessarily make them do things they have to do by law -- if they fail to do so it is to their disadvantage -- but make sure they do everything you want them to do. Make sure you have a plan B and if there are any alarm bells or red flags, take heed and pull back. Do NOT hand over the cash until it's all done and you need the key to move in. Till then a holding deposit should be sufficient. And before doing the moolah/key exchange go to the property and have one last, thorough check.

As for being evicted, I agree with Lootman for once: it is a difficult and drawn out process for the Landlord if you don't roll over. Your biggest risk in handing over 6 month' rent is actually before/upon taking possession: that you miss something and have buyer's regret. NB: Once you have handed over the cash you cannot easily get it back! Hence the points in the paragraph above.

Good luck.

GS

[UncleEbenezer]

Last place I rented (2013-19), I paid six months up front. They didn't ask for it, I offered, as part of negotiating a significantly lower rent than they were asking. After the six months I took to paying monthly and resisted the agent's trying to raise it for that.

After that, agent tried all kind of underhand tricks that might've reduced my younger self to a gibbering wreck (or made me pay protection money). But with the benefit of experience, and without the financial precariousness of youth, I was able to stand my ground. And on the one occasion I actually met the landlord, he was happy to have me for as long as I wanted: he had enough sense to prefer reliable rent over an agent's delusions of more.

Re: the original question - I know it used to be a real risk, and it actually happened to a friend of mine (though in his case, the agent alerted him to the issue so he had warning before the bailiffs turned up). I'm not sure if that's been fixed. I understand the problem would arise if the tenancy was in violation of a clause in a mortgage, which would render the tenancy legally unenforceable on the mortgage lender.

[Clitheroekid]

Repossession is really just like any other change of title, as happens more commonly when a property is sold to anther party. In those situations nothing changes for the tenant upon completion of the transfer.

This is by no means always the case, and for many tenants repossession can be a massive problem.

This is because there are two different types of tenancy - those that are binding on the lender, and those that aren't.

Essentially, the difference depends on whether the lender knew - or was deemed to know - about the tenancy. So if the mortgage is a buy to let mortgage, or if it was taken out after the tenancy had started it will be binding on the lender. They would then have to go through the full process of issuing separate possession proceedings against the tenant, just like any other landlord.

But if (as is still frequently the case) the mortgage is not a buy to let mortgage, so that the borrower has let the property in contravention of the mortgage conditions; or if the tenancy began after the (non-BTL) mortgage was taken out the tenant can be evicted by bailiffs under the main possession action against the borrower.

A tenant in this situation can apply to the court for a delay in enforcing the eviction, but the court can only grant a maximum of two months. This contrasts sharply with a conventional possession case by the landlord, where a tenant could realistically expect to remain in the property for six months or more, while the court process grinds its way along.

So returning to the OP's question, it's essential to establish that the landlord's mortgage is actually a BTL mortgage. If it is, then in the event of repossession you will basically have the same degree of protection against the lender as you would against the landlord.

[Mike4]

Repossession is really just like any other change of title, as happens more commonly when a property is sold to anther party. In those situations nothing changes for the tenant upon completion of the transfer. The terms of your lease remain the same, except that you now pay your rent (same amount) to a new owner who will identify themselves to you for that purpose.

Also upon any change of title, any monies you paid such as a deposit or rent in advance, gets credited to the new owner and remains their liability to you.

You'd like to think so wouldn't you? But I think when a property is repossessed by the lender this is one situation when the tenant can be evicted with virtually no notice. Hopefully CK will be along soon to clarify.

The lender in repossession might well Do The Decent Thing and step into the shoes of the LL and continue renting, but this is highly unlikely as they have an obligation to obtain best market value when disposing of it, and will therefore feel obliged to auction the property with vacant possession which they have the right to obtain immediately.

[JonE]

I think when a property is repossessed by the lender this is one situation when the tenant can be evicted with virtually no notice.

Schedule 2 of Housing Act '88 sets out grounds on which a court must order possession in Part 1. Ground 2 applies where a mortgage existed when the tenancy commenced.

My recollection is that when this was seized upon as a shock-horror outrage perpetrated by evil (by definition) landlords the media attention on unwitting tenants being at risk of eviction through no fault of their own covered only properties subject to residential mortgages rather than BTL loans but allowed the interpretation that it applied to all mortgaged properties. The fuss prompted major lenders to cobble together a policy statement consistent with noises being made by government indicating that they wouldn't enforce their rights in full and would take an 'understanding' position rather than have tenants receive notices out of the blue leading to accelerated possession. A few articles subsequently appeared covering lenders who stood as landlords and continued tenancies and the media attention turned elsewhere.

Cheers!

[Mike4]

I'm looking at renting again, and for various reasons the estate agent is asking for 6 months rent up-front.

Opening out the debate, I am woefully out of date with property law but recent changes limit the security deposit landlords may hold to the equivalent of five weeks' rent AIUI. Demanding six months' rent in advance sounds to me like a huge security deposit in all but name. Is this actually legal?

Could the OP cite the 'five weeks' rent deposit' regulation (whatever it is) to defeat this demand?

[Clitheroekid]

Opening out the debate, I am woefully out of date with property law but recent changes limit the security deposit landlords may hold to the equivalent of five weeks' rent AIUI. Demanding six months' rent in advance sounds to me like a huge security deposit in all but name. Is this actually legal? ?

Yes, completely. There is a fundamental difference between rent paid in advance and a security deposit, in that the tenant expects to have the deposit returned at the end of the tenancy.

[Maylix]

So returning to the OP's question, it's essential to establish that the landlord's mortgage is actually a BTL mortgage. If it is, then in the event of repossession you will basically have the same degree of protection against the lender as you would against the landlord.

Thanks for all the replies, all helpful. So if the Landlord has no mortgage, or a BTL mortgage, the 6 months rent upfront is reasonably safe. But any ideas on how I establish the situation with regards to the mortgage? I could ask the landlord, but I doubt they'd tell me, and even if they did, I couldn't really rely on their say-so, could I?

Maylix

[UncleEbenezer]

So returning to the OP's question, it's essential to establish that the landlord's mortgage is actually a BTL mortgage. If it is, then in the event of repossession you will basically have the same degree of protection against the lender as you would against the landlord.

Thanks for all the replies, all helpful. So if the Landlord has no mortgage, or a BTL mortgage, the 6 months rent upfront is reasonably safe. But any ideas on how I establish the situation with regards to the mortgage? I could ask the landlord, but I doubt they'd tell me, and even if they did, I couldn't really rely on their say-so, could I?

Maylix

I think you can find out from the land registry if a mortgage exists. But that won't tell you the terms of the mortgage if there is one.

Note that if the mortgage is less than the no-nonsense value of the house, you have another potential route to recover any losses: you can claim from the proceeds of a sale in repossession. There's a fine story on Housepricecrash - posted as the story progressed - of a tenant owed his deposit back, who obtained a court judgement (ignored by the landlord) and eventually got a repossession order on the house himself!

One more possible consideration: the Agent is representing to you that it's legitimate. If the worst came to the worst, might you be able to sue the Agent for misrepresentation - maybe negligence or even fraud? Is that worth anything? It might be, if the agent is doing good business and has something to lose! But don't take my uninformed speculation: maybe our more learned Fools could enlighten us. Maybe there are precedents?

[Lootman]

recent changes limit the security deposit landlords may hold to the equivalent of five weeks' rent AIUI. Demanding six months' rent in advance sounds to me like a huge security deposit in all but name. Is this actually legal?

Could the OP cite the 'five weeks' rent deposit' regulation (whatever it is) to defeat this demand?

I believe that some countries limit the total amount payable upfront by a tenant to (say) the equivalent of 3 months of rent. But the UK is not one of them and, in my landlording days, I would sometimes ask for (or be offered) 6 or even 12 months in advance. This would reduce the risk of default for that long, and means I don't have to worry about collecting the funds, the rent being late etc. It also ensures that your tenant is solvent since most applicants could not muster that kind of amount. For the tenant it ensures that the rent cannot go up during the prepaid period. And the tenant may be able to negotiate a lower rent by offering to prepay.

I heard of one case where a tenant prepaid 5 years worth of rent. He then died and there was a legal dispute between the landlord and the estate of the deceased over the "asset" of that prepaid rent. I don't know how that dispute ended up but the will beneficiary was claiming a right to possession for the duration of the prepayment.

[Charlottesquare]

Hi
About 12 years ago, when I was last thinking of renting a property to live in, one of the scare stories that was doing the rounds was Landlords who would let you their property under an AST, but unbeknownst to you they were behind with their mortgage payments, so the property would get repossessed, say 1 month after you moved in and you (the renter) would have to vacate the premises. Obviously causing massive inconvenience, and loss of any rent paid in advance.
I'm looking at renting again, and for various reasons the estate agent is asking for 6 months rent up-front. But they assure me that my scenario couldn't happen because 'they vet their landlords and wouldn't take on anybody in that situation', but of course they're not willing to share any of their 'vetting' results, and anyway I don't believe them.
They also say that tenants rights have strengthened over the last 12 years, and I would not be kicked out if the house was repossessed anyway. Whilst I'm anecdotally aware that tenants rights have increased, I'm not sure if they have in this particular area, and without specifics I'm worried about possibly losing 6 months rent.
Does anyone have up-to-date knowledge on this scenario, whether it's still a possibility and if so any steps that I could take to minimise my risk?

TIA
Maylix

Okay, let's get a few things straight!

1. Your contract will not be with the agent but with the landlord.
2. On top of the contract there is a variety of statute (law) governing ASTs, most of it providing pretty good protection for tenants.
3. You can assume that agents on the whole are crooks. Don't trust them as far as you can throw them. Landlords are a bit better but often refuse to engage with their tenants. This leaves the tenants at the mercy of the crooks.
4. Since the banning of tenant fees the power balance between tenant and agent has evened up. Fight your corner!

As for your personal situation, handing over six months' rent is a huge risk. If you agree to do so make sure you get EVERYTHING in order in advance. Have a solicitor look at the contract. Fight over every little thing you disagree with in the check-in inventory/report. Bargain down the rent a bit in exchange for the six months up front. Don't necessarily make them do things they have to do by law -- if they fail to do so it is to their disadvantage -- but make sure they do everything you want them to do. Make sure you have a plan B and if there are any alarm bells or red flags, take heed and pull back. Do NOT hand over the cash until it's all done and you need the key to move in. Till then a holding deposit should be sufficient. And before doing the moolah/key exchange go to the property and have one last, thorough check.

As for being evicted, I agree with Lootman for once: it is a difficult and drawn out process for the Landlord if you don't roll over. Your biggest risk in handing over 6 month' rent is actually before/upon taking possession: that you miss something and have buyer's regret. NB: Once you have handed over the cash you cannot easily get it back! Hence the points in the paragraph above.

Good luck.

GS

Speaking from the other side of the fence, as both landlords and agents (and with neither hat on are we crooks) if we get prospective tenants nit picking before the lease is even signed, as you suggest, we have a simple solution, we just do not bother leasing to them and find A N Other tenant instead.

If we insist on say six months up front it is usually because we have reservations re the tenant, if the tenant, before the lease is even signed, behaves as you suggest then human nature being as it is our reservations would likely solidify into not wishing to lease to them.

I have no idea down south but I have never come across any issues with a tenancy if the landlord gets into financial difficulties during the lease term, it is why banks, certainly lending against property with commercial tenants, often have a step in agreement put in place so if the landlord defaults they, the bank, may step into the landlord's part.

Seems to me from a legal perspective this is all tilting at windmills.

[Lootman]

As for your personal situation, handing over six months' rent is a huge risk. If you agree to do so make sure you get EVERYTHING in order in advance. Have a solicitor look at the contract. Fight over every little thing you disagree with in the check-in inventory/report. Bargain down the rent a bit in exchange for the six months up front. Don't necessarily make them do things they have to do by law -- if they fail to do so it is to their disadvantage -- but make sure they do everything you want them to do. Make sure you have a plan B and if there are any alarm bells or red flags, take heed and pull back. Do NOT hand over the cash until it's all done and you need the key to move in. Till then a holding deposit should be sufficient. And before doing the moolah/key exchange go to the property and have one last, thorough check.

Speaking from the other side of the fence, as both landlords and agents (and with neither hat on are we crooks) if we get prospective tenants nit picking before the lease is even signed, as you suggest, we have a simple solution, we just do not bother leasing to them and find A N Other tenant instead.

If we insist on say six months up front it is usually because we have reservations re the tenant, if the tenant, before the lease is even signed, behaves as you suggest then human nature being as it is our reservations would likely solidify into not wishing to lease to them.

I agree. In over 30 years of being a landlord, I had over 100 tenants and over that time I developed some pretty reliable indicators about who was going to be a good tenant and who was going to cause me grief.

An applicant who nitpicks clauses in the lease is an obvious warning sign. Everything in a lease is there for a reason, and given that there are plenty of applicants who will sign a lease as is, there is no reason to play games with an applicant who wants to debate every clause in the lease. It's easier just to move onto the next applicant.

That said, I appreciate an applicant who reveals their true colours as readily as GS does. The more pernicious case is where a tenant is all sweetness and light up to the point of getting the keys, but then turns out to be a pest. So a landlord needs to be aware no matter how nice and reasonable the applicant appears to be. I developed my own rules about that, and questions that help solicit such tendencies.

Of course it helped that my housing units were in desirable locations so I always had multiple applicants for each vacancy. If you only have one applicant and its a nitpicker then you have less choice - either take a risk with them or lower the rent to broaden the appeal.

More generally I don't like to see the landlord/tenant relationship perceived in such confrontational ways. My experiences were almost universally pleasant and cordial, and every time I asked a tenant to leave they did so, rather than get into a fight. And I never had a default on rent either. Some others are not so lucky. But my point is that there are good and bad landlords, and good and bad tenants. Characterisations such as "sneaky" aren't helpful in that regard.

[GoSeigen]

=

That said, I appreciate an applicant who reveals their true colours as readily as GS does.

Lootman knows sweet FA about me for the record, so is in no position to say what sort of applicant I am.


GS

[Lootman]

That said, I appreciate an applicant who reveals their true colours as readily as GS does.

Lootman knows sweet FA about me for the record, so is in no position to say what sort of applicant I am.

My comment, echoing the post I responded to, was not in any way a criticism of how you conduct yourself. That is entirely your choice. In fact I even mentioned that I prefer someone who signals where they are coming from right off the bat, as you clearly do.

I was simply agreeing with the stated sentiment and experience that it is often prudent for someone offering a service to be discriminating about who they deal with based on prior experience of what has worked better in the past. Just as you decide what rentals you will take based on your values and principles, so will that landlord as well. Fair?

[Arborbridge]

Sneaky Landlords? This all sounds like a real battlefield and maybe it is largely tilting at windmills.

I've been a landlord for about twenty years and this has never been a battlefield for me or my tenants. It's healthy to prepare for the worst but hope for the best, but I agree with an earlier poster who wrote that there is a certain amount of tilting at windmills here. Sometimes one can over analyse a situation rather than taking people at face value. Agents are not necessarily bastards, and landlords mostly aren't either: that assessment is far too jaundiced, in my experience. I'd expect tenants to have just as much to hide and just as much to protect thereby occasionally massaging the truth. But on the whole, my experience is firmly on the good side.

Asking people for 6 months rent up front is often done when there is a problem with the applicant - his income, employment prospects, whatever - otherwise why wouldn't a normal monthly rent suffice? It's a red flag to a landlord for what happens after the six months? One is potentially stuck with a problem tenant. I accepted a guy on this basis once, but it was a finger in the air job - he just seemed OK, and he was. I didn't like it, though.

As regards whether the mortgage is BTL, I believe one may deduce it from one of those sites listing property sales. I know my last property sale wasn't ever listed and when I asked why, it emerged that sales subject to a BTL mortgage are not shown for some reason.

Arb.

[johnhemming]

Landlords vary and tenants vary and people complain about the bad ones, but we tend not to hear much about the good ones. I would think most landlord/tenant relationships go quite well.

[UncleEbenezer]

... and every time I asked a tenant to leave they did so ...

You are or were a landlord, and regard turfing a tenant out of their home as such an everyday matter as to speak of it in those casual terms?

Or have I got hold of the wrong end of some stick?

Speaking as someone who has twice been turfed out of a rental[1], that casual attitude is precisely what's wrong with the system! Tenants need security: the only ground for no-fault eviction should be the case of a landlord renting out his/her own home, and serving notice of that situation in advance.

Then tenant goes quietly because they're in a weak position and terrified of a fight.

Landlords vary and tenants vary and people complain about the bad ones, but we tend not to hear much about the good ones. I would think most landlord/tenant relationships go quite well.

Up to a point, Lord Copper. I expect you could say the same of masters and slaves.

But my landlord and agent from 2005-2013 - being genuinely good - were sadly the exception rather than the rule in my experience. Beggars can't be choosers, and many tenants quietly put up with a level of abuse of which the landlord may not even be aware. Routine examples: defects that should be the landlord's responsibility[2]; loss of privacy when an agent arranges for someone to enter (albeit usually for entirely valid reasons) and fails to give notice; general bullying behaviour by agents, and (one I haven't personally faced) extorting additional fees from tenants for "renewal".


[1] First time in 1991/2: entirely the agent's fault, as it turned out the landlord (whose own home I rented while he was serving in the army overseas) would've preferred me to stay the extra three months I wanted. Second time in 2005, after my then-landlady's messy divorce, when she wanted to get shot of the flat. She timed that well: it re-sold in 2014 at a price 8.6% lower than she'd got for it.
[2] Like moving in and finding the large patch of black mould - which the agent promised the landlord was dealing with before the tenancy - was still there, along with a level of damp.

[Lootman]

... and every time I asked a tenant to leave they did so ...

You are or were a landlord, and regard turfing a tenant out of their home as such an everyday matter as to speak of it in those casual terms?

Or have I got hold of the wrong end of some stick?

Speaking as someone who has twice been turfed out of a rental[1], that casual attitude is precisely what's wrong with the system! Tenants need security: the only ground for no-fault eviction should be the case of a landlord renting out his/her own home, and serving notice of that situation in advance.

Then tenant goes quietly because they're in a weak position and terrified of a fight.

I never asked a tenant to leave without a reason. It only happened a few times and mostly because I was selling the place and wanted vacant possession, or was planning a change of use. But I think we fundamentally disagree about the nature of renting. From my perspective renting is essentially a short-term proposition. If you rent there is no reasonable expectation that it will be long-term or permanent. Rather its temporary nature and the flexibility that implies has value to the tenant. Leases are typically for 6 months only for a reason. I had 15 housing units and over 100 tenants, and that is indicative of natural turnover.

If someone is in the TLF demographic ( i.e. older, professional, reasonably well off etc.) like you or GS, then I'd normally expect that they would be homeowners as surely most Lemons are. Those who nevertheless choose rental housing presumably do so for a reason, e.g. their work involves frequent changes of location. In which case their rental homes will always be seen as temporary anyway.

I think you and GS may be exceptions to the norm. For whatever reason you both have made the decision to rent rather than own, and then find yourself resenting that situation. That then leads to a confrontational attitude towards the person providing you with housing. When I did have a problem with tenants it was never the poor unskilled ones, who generally appreciated that I was providing them with a home. But rather with the more educated and professional tenants who seemed to somehow resent that they were in the position of having to rent. Which is why one of my rules about who to rent to was based on their occupation, and not their solvency on paper. Unless you are a corporate landlord then it is a very personal matter who to rent to. Personality matters at least as much as credit history and income; one of the best tenants I ever had was on benefits.

I always took the view that I was providing a vital and valuable service by renting to people and giving them a home. And the vast majority of tenants took the same view and demonstrated appreciation rather than entitlement.