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A friend of mine has just been in touch with me regarding an issue they face. I shall explain the situ below and if anyone can guide please do throw in some pointers I can direct to them.
- They have a flat in Nottingham City Centre. They don't live in the UK. They have been sent some letters from Nottingham City Council asking details of tenant who resides in their property. They are also asked to apply for selective licensing as they fall within the category and they don't currently have one. Infact, they didn't even know what it is until today.
- They are not covering the mortgage payment each month and are almost 2 months into arrears. They expect repossession team to be behind them soon. Am told this property has been a bad investment losing money from day 1. No point to keep it and struggle as its in negative equity by 50% of the Property price.
- Now with regards to Selective Licensing, a quick look shows they have to pay around £750 to obtain a license. They don't have the means to pay for this (hence the mortgage arrears).
I am asked, given that they anticipate another 2-3 months before the property gets repossessed, can they explain the council what is happening via email? Because within 2-3 months, they will no longer have this property in their hands. Would the council act favorably towards such a situation, or will they only create more problems for them?
The property has been managed by themselves until now. The current tenant has been there since Jan 2013.
- if they need to give tenants notice, they are on rolling contract and can do it immediately and let the property repossess in empty state when it happens.
Can anyone suggest what would be best course of advise for them.
They have a tenant paying rent and they are paying nothing towards the mortgage?
They do know that if it gets repossessed that the mortgage doesn't go away, they are still liable for the debt, and any remaining debt even after the sale.
Does the tenant know the property is potentially going to be repossessed?
To be honest council is least of their problems, they should be takking to mortgage company about options
Slowly working towards financial freedom
I think the fact that they have around 50% negative equity suggests that they are in a very difficult place. First of all they need to understand what they want the outcome to be. So do they want to continue renting (unlikely based on what you've said) or do they want to sell up and exit.
If they want to exit, I think they still need find a way but it doesn't sound like something they will be able to do it quickly; unless they go down the repossession route. If they do want to sell then I think they need to speak to a mortgage broker first to explore their options and help them plan a strategy. This is because they will need to perhaps get a grace period their lender by speaking to their department that deals with payment difficulties (this should happen quick before it gets worse).
With regards to the council, in my experience they are quite rational and reasonable provided the communication channel is kept open. It's good to work with them rather than against them.
I would say that they start speaking to everyone openly and honestly to understand what options are available. Then speak to a good quality (no-fee) broker who looks after whole of market to see what the best route to navigate is.
Disclaimer: I have no legal expertise nor am I a qualified advisor on any subject. A humble landlord using an open forum to exchange ideas and experiences.
>With regards to the council, in my experience they are quite rational and reasonable provided the communication channel is kept open. It's good to work with them rather than against them.
If that is specifically Nottingham Council, then I defer. My knowledge would be somewhat different.
50% negative equity, can't pay mortgage. months in arrears then its game over. Just vote for Brexit and hope you live in a country where they can't chase you.
Absolutely terrible, isn’t it?
How can anyone leave things to slip so far is beyond me.
Im sorry for the tenants, st least this landlord should have the decency to tell them
That's another point where landlords should be obliged to inform tenants of any mortgage arrears so they are prepared. Landlords ask for everything now its time tenants start asking questions. This way tenants get a better class of landlord. Too may fly by nights thinking renting is just easy money without any responsibility.
Afraid its another case where i have very little sympathy, managed from abroad but had no knowledge of selective licensing and have arrears, rather suggests the use of the word “managed” is somewhat optimistic in any real sense of the word and is yet another example of what leads to the current opinion of landlords in the UK.
What would it have taken to have looked at the councils website private sector housing page once a month?
Just had a quick look and deadline for applications was August 2018 , not sure when the consultation started. Plus overseas landlords are no elegible for a licence and so must have a management agent.
They will need to give the tenants 2 months notice even though they are on a rolling contract.
They may also discuess with the council the possibility of obtaining a TEN notice which provides a temporary exemption.
Best speak to the authority before there is a threat of a fine or being made a scapegoat .