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  • Debt & Negative Equity

    NEVER hand the keys back to a lender

    This thread has been prompted by another post where a PT member said they had handed 3 sets of keys back to the lender because of Section 24.

    I went on the thread and advised them not to do it and gave a few reasons.  I then tweeted the thread.

    It received this response on twitter, which I felt gave a good salutary warning.  The below is a cut and paste of the series of tweets telling the story of what happened to this landlord when she did that:


    Vanessa Warwick  Strongly advised landlord against handing back keys to lender -  ow.ly/rC0d30jjgOe


    All the reasons you said. Plus: the mortgage lender may take a long time to legally "repossess" the properties. Never mind actually selling them. And all this time the owner may build up more charges, eg. factors bills, council tax if empty, etc

    I took advice to go Voluntary Bankrupt in 2014 because my health was very poor. I couldn't manage anything. And I was told that the Trustee In Bankruptcy would deal with handing all flats back to lenders. Or selling them themselves- at a pittance obviously

    I wasn't insolvent as my assets well exceeded any capital "debts". But I was too ill to carry on. I accepted Bankruptcy as I knew all flats (15 of them) would be sold at a pittance. Thereby producing big mortgage shortfalls

    It was Bankruptcy in reverse really. Not insolvent at beginning - but I would be by the end. But I couldn't manage anything myself because of my health deteriorating. My only priority was to have somebody deal with getting rid of everything for me.

    But some mortgage lenders take an absolute lifetime to go through their legal repossession process. eg. 1 empty untenanted flat took almost 3 years to repossess. Another flat only repossess 2 weeks ago.

    Another flat still hasn't been dealt with. This is now into the 5th year of what had been absolute Hell for me. I'm not daft - I knew it wouldn't happen overnight. But nobody would expect 3, 4 or 5 years . . . !

    Last year 2017 - I had to spend 10 months of the year handing legal and court actions against me. For Factors bills that had built up on a flat that had been long-term empty. But the bank took almost 3 years to repossess. I had to do this mostly while in bed

    Anyway, it was all terrible advice. And the point is - that handing back keys will not solve anything. Sorry this was so long. Needless to say the whole experience made my health even worse. Not better. And very poor financially

    So "handing back keys' may just result in :

    1) A big shortfall when the property is repossessed then finally sold cheaply by the bank.
    2) Months or years of mortgage arrears building up
    3) Other bills, charges maybe building up too, eg. factors bills, C/tax on empty properties.


    If a property is re-possessed and sold at a fire-sale rate, there will likely be a short-fall in terms of what you owe the lender after the sale.  The lender can them come after you and/or your assets to claim the now unsecured loan.  They can demand repayment, put a second charge on another of your properties, or in extreme cases, seek to bankrupt you.

    Anyone struggling with mortgage payments should seek professional advice as soon as possible.  The sooner you seek the advice, the more options you will have to solve the problem or mitigate the damage.

    ​There is an excellent company, one of the Property Tribes' sponsors, who are the only FCA regulated company for this type of work in the UK.  They are called Landlord Debt Advisory and they assist landlords in financial difficulty, in many cases re-structuring things or negotiating with lenders so that the landlord can survive.

    You can call the helpful and supportive team at LDA on 0161 222 4311.

    SEE ALSO  -           Surviving a recession with your portfolio

    UP NEXT -               Dilemma - Stick ,Twist or Fold.
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    S24 is causing many LL to progressively sell off which is what I'm doing

    Sell a property every tax year

    This needs to be done before all S24 LL realise what is going on and have a mass rush to sell up.


    hi paul_barrett

    For those who need to sell, doing one per tax year is probably the best strategy. I'm planning a sale in 2018/19 tax year.

    The Twr story is so sad and an important lesson from it is Look after yourself first- your own health and your own wealth. As the saying goes "Put your own lifebelt on first" Illness comes and it can be devastating, as happened in the story, the worst part is that person couldn't find a trusted friend to help

    I'm still optimistic that I can manage the extra costs of S.24 but I'm adding a small extra amount to my pension pot to mitigate S.24.


    I believe there are many more sad stories waiting to come out

    S24 will force many LL to realise they need to sell

    If they all realise at the same time there will be a mini HPC until all S24 LL properties have been sold.

    This sad example is just the tip of the iceberg.

    There will be many more to come.


    @ paul_barrett, I agree. People have often been able to absorb losses in the recent past, especially where capital growth has lifted them out of the extra costs. Those days may well be gone.

    As always it will be the honest tenants and LL who suffer.

    Risk is increasing


    Then again £11300  nil rate CGT @28% is only saving £3164 and if market falls in meantime....