Iminent repossession of rented property - Should I withhold rent?

[Mr Pipps]

Background

I have recently discovered that the property which I rent is soon to be repossessed at the County Court by my landlord's mortgage lender.

 

I have also discovered that my landlord has never made one mortgage payment to the lender. In addition, it has been uncovered that he is a known fraudster in the Birmingham area, and that he uses false names and addresses, empty Limited companies, and has performed this 'theft of rent' [problem] hundreds of times over tahe past few years.

 

There is a letting agent which acts as rent collector. And a number of legally incorrect and deliberately negligent emails from the letting agent have made me suspect that they are in collusion with the landlord in this.

 

The position I am in now, is that the County Court are likely to order that the property be repossessed by the lender at the hearing on 19 March 2008.

 

My understanding is that the tenancy will be terminated on the day that the County Court issue the repossession order and that on that day I will no longer have any legal right to occupy the property. The tenancy will therefore no longer exist in law and neither the landlord or I will be bound by its terms.

 

My question

Should I continue to pay rent now, for the next rental period which starts on 15 February 2008 and ends on 14 March 2008?

 

By way of background, my deposit is an amount equal to one months rent and is held in a tenancy deposit scheme. My lease commenced on 15 November 2007 and so I have not yet been able to serve the minimum period necessary for tendering notice. It's a tricky situation.

 

My thinking

My thinking is that, as I will no longer have a tenancy after 19 March 2008, and so I may as well not pay rent now, so that I can mitigate my losses as far as possible.

 

My request

I would really like to hear anyone's thoughts on this. Specifically:

- Is my reasoning here sound?

- Could this course of action have an adverse impact on my credit rating?

 

I look forward to your responses.

[Planner]

My initial thought would be that you open a basic bank account straight away and pay the months rent into that. Tell the agents/landlord/mortgage lender you are doing this in writing, and that the funds will be available once it becomes apparent that the landlord is going to be able to fulfil is obligations under the AST i.e. provide you with accomodation!

 

I would also get looking for somewhere else to live without delay.

 

I assume you paid a months rent in advance and the LL holds your deposit?

[Mr Pipps]

I am intrigued by your idea on the justification of withholding rent on the basis that I reasonable require assurance that I will not be rendered homeless during the tenancy.

 

I do not have a copy of the contract available to check at the moment - but will an assured shorthold tenancy usually require that the landlord find alternative accomodation for the tenant if the tenant can no longer live in the original property for any reason?

 

In terms of using the separate bank account - is this effectively creating something similar to an escrow situation?

 

In terms of the likely outcome here - it is almost certain that the landlord will not find alternative accomodation for me.

 

In this case, might I just as well not bother with the separate bank account, and just not pay the rent.

 

In this instance, could the letting agent have me evicted before the 19 March 2008?

[Joa]

Have you seen this post: http://www.consumeractiongroup.co.uk/forum/residential-commercial-lettings/130859-rented-house-repossed-tommorow.html#post1376063

[Mr Pipps]

Thanks for the link.

 

I'm not sure I understand how that applies to my questions regarding my situation at the moment?

[Joa]

My post does not maybe apply to your situation entirely but i wanted to point your attention to Shelter's link and possibly their helpline number.

[Mr Pipps]

Shelter are always worth a mention. Thank you.

 

I visited Shelter in person last week. They were rather at a loss for words and couldn't provide any advice whatsoever.

 

So I am back to the internet forums - where the real experts dwell.

[Killerschick]

With regards to getting kicked out before the mortgage possession hearing, it wouldn be prtactically impossible to do it legally. As indicated by the date of the mortgage company's hearing, there's usually a waiting period of several weeks to get a hearing date so it's extremely unlikely the landlord would get a date before the mortgage company's. It would be illegal for anyone to try and evict you without an order and warrant.

The only risk I can see to your strategy is the possibility that the landlord may issue proceedings against you for the unpaid rent when you move on but if he's as shady as you say I doubt he would take this route.

You can attend the mortgage possession hearing and ask for time to move but mortgage possession orders are usually 28 day orders anyway i.e. the mortgage company cannot apply for an eviction date until 28 days after the hearing. Then, when they do apply for a Warrant, there's usually a delay of a few weeks in getting a bailiff's appointment so realistically you can probably stay where you are until May (if you want to).

[Nightmare4banks]

Mr Pipps in reply to your posts:

 

Please answer the following question:

 

When did you sign the tenancy agreement and for how long?

 

 

The answer to this question should hopefully enable me to assist you further.

[Mr Pipps]

...My lease commenced on 15 November 2007...

 

I look forward to receiving your advice.

[Mr Pipps]

...Tell the agents/landlord/mortgage lender you are doing this in writing, and that the funds will be available once it becomes apparent that the landlord is going to be able to fulfil is obligations under the AST i.e. provide you with accomodation!

Planner, looking at your response again, it is incredibly useful. I would like to better understand the detail behind it.

 

Is a landlord's obligation to provide the tenant with accomodation a statutory obligation?

 

Does this apply in the event that the property stated in the assured shorthold tenancy agreement can no longer be let by the landlord to the tenant?

[Planner]

Planner, looking at your response again, it is incredibly useful. I would like to better understand the detail behind it.

 

Is a landlord's obligation to provide the tenant with accomodation a statutory obligation?

 

Does this apply in the event that the property stated in the assured shorthold tenancy agreement can no longer be let by the landlord to the tenant?

 

I dont think the LL is under any statutory obligation to provide you with accomodation once the property is repossesed. And even if it was an obligation what are the chances of them fulfilling it, given their obviously dicey financial situation.

 

If you are convienced that you are going to be asked to leave the property, then its all down to you mitigating your losses now.

 

Rereading your original post, I would pay the rent up until the 14th March as you are going to be living there. In the mean time I would do what I suggested previously, write toi the agents, LL and mortgage company saying that you will pay march/april rent into a basic bank account until the outcome of the hearing on the 19th is known. You will then have to make a decision of how to best mitigate your losses, did you pay a month in advance by the way?

[Mr Pipps]

Mitigating losses - agreed.

 

I have been paying rent one month in advance, so far.

 

I also paid a deposit up front of an amount equal to one month's rent.

 

I have just over one month now until the County Court hearing on 19 March 2008. From wider research, I am certain that the landlord will not attend the hearing, as apparently he has done exactly this with hundreds of other properties previously.

 

The way I see it - the best action for mitigating my losses would be to not pay anything now. If the landlord wishes to recover the loss of rent from my deposit, then that's fine by me. At least this course of action will not mean that I risk paying rent and still loosing my deposit.

 

What do you think?

[Planner]

I thought your deposit was held in a relevant TDS. If you are 100% sure of this (ring them and check).

 

My only concern is that is there not a chance that the hearing at the hearing on the 19th the property wont be repossessed? - thats why its important to make sure you set the rent aside and inform them your doing so until the outcome of hearing. If the hearing decides the property is to be reposesed then, the landlord will have your months in advance for period up until 14th March.

 

You can then move out, and get all your deposit back, and I suppose you would then have the option of taking the LL to court for the expense of you having to move etc.

[Mr Pipps]

I like your thinking...

 

Are you saying that if the landlord or his agent do not provide any assurance that they will provide alternative accomodation then I would not be required to release the month's rent from the separate bank account and remit it to them?

 

And then I could still get the full deposit back, even if I haven't paid the rent for this same period? (16 February to 15 March.)

 

What do you think?

[Planner]

Im saying if come the 19th March, it becomes apparent you soon to become homeless, then the months in advance you have already paid at the start of your tenancy will ensure that you arent in arrears for 16th Feb to 15th March.

 

That leaves the 4 day period 15th march to 19th march where you will technically be in further arrears. So come the 15th March, you might like to pay 4 days rent to the LL to cover that period, out of the months rent you have set aside. Then on the 19th

 

If you have to leave, then you have 28 days (reading the other posts to your question) into which to do so, it would be my opinnion that the landlord should be told to whistle for money for this period as he has failed to provide you with a fixed term of tenancy (6 months) and incurred you with additional costs in having to move early.

 

The money you set aside in the seperate account will be yours as you wouldnt owe the LL anything else.

 

If your depsoit is protected you should get it back.

[Mr Pipps]

Good points.

 

My deposit is definitely protected under a TDS.

 

However, in terms of thinking about the most straightforward route to mitigating my losses, just leaving that deposit to the landlord and not paying for the next months rent would certainly be easier. And it's not like the landlord or the agent would able to evict me within this period, even if they were inclined to do so, which they're clearly not.

 

There is a possibility that the landlord could turn up and that the property remains in his possession. Then I would be in breach of the AST by having not paid the rent. I would be required to continue to live out and pay rent for the remainder of the minimum six month period, to the 15 of May.

 

In this highly unlikely event, what would the risk be? That I am liable for the months rent which I did not pay. Well, that can be taken from my deposit. In addition, I would be required to stay for an additional two months. Well I would pay for those two months as normal. I would then have nothing to

 

I think this is a hardball approach which I am proposing, and it is technically not the right thing to do, but I think it is the best way to protect my position, and in my opinion the risk of loosing my deposit is offset by not paying any rent for the final month (plus four days) of my tenancy, before I am rendered homeless.

 

One question - would the landlord or his agent be entitled to enter the property at any time without my permission, once I am in arrears?

[Joa]

 

One question - would the landlord or his agent be entitled to enter the property at any time without my permission, once I am in arrears?

 

No.

[Nightmare4banks]

Mr.Pipps,

 

In reply to posts and in my view - assuming here that your tenancy is for 6 months:

 

1.If your landlord has a mortgage that allows a tenancy - Buy to Let - this would mean that form of receiver would be appointed to make sure that the tenant has a valid tenancy,collect the rent and serve the notice upon the tenant.This type of arrangement comes under the Law of Property Act 1925.

 

2.The next step would be to sell the property to recover the amount borrowed from the mortgage company.

 

3.If the mortgage agreement is not like what I outlined in point 1 above the bailiff would turn up and kick out the tenant(the tenant would receive a notice to the occupier regarding the eviction as a result of the default on the mortgage payments by the landlord.In this instance the tenant should communicate with the bailiff asap in order to have adequate time to find alterative accomodation.Sale of the property would then follow - as mentioned in point 2.

 

4.I cannot see any reason why a tenant should not pay the rent.However,there is nothing to stop the tenant from suing the landlord after moving out if the eviction happens and mainly before the fixed term of the tenancy had expired.

 

5.The other scenario would be that the landlord could get a possession order suspended with an order for him to pay the monthly mortgage instalment plus an agreed amount until the arrears are cleared.If the landlord defaulted on this arrangement the property would then be repossessed.

 

6.As long as the deposit is held in a proper scheme,there is no reason why you should lose any money as long as you not damage any of the furniture/landlord's fittings causing him to want to have a claim against you.

 

So,basically if I were in your position I would continue to pay the rent and in the worst case scenario keep in touch with the bailiff and you should be okay.

 

I hope you find this information useful

 

If you have any questions,feel free to ask.

 

Keep us posted.

 

All the best!

[MrShed]

I personally agree totally with Planners(very detailed) answers above. I would also recommend withholding the rent but keeping it in a seperate account - in these situations there is a significant amount of confusion about to whom the rent is payable, and it is fair for the tenant to withhold until this is clarified by the courts. However, be aware that REGARDLESS of the outcome, this rent IS payable, the only question is whom it is payable to.

[Mr Pipps]

1.If your landlord has a mortgage that allows a tenancy - Buy to Let - this would mean that form of receiver would be appointed to make sure that the tenant has a valid tenancy,collect the rent and serve the notice upon the tenant.This type of arrangement comes under the Law of Property Act 1925.

Hello Mr 4Banks

 

Further to my PM, one questions which I have regarding point 1 of your detailed advice above is...

 

How and when would the mortgage lender be appointed to take over the assured shorthold tenancy agreement from the former landlord, in this scenario?

 

I have a link to the Law of Property Act 1925. Would you be so kind as to point me to the relevant section, please?

 

My understanding is that the current landlord does have a Buy to Let mortgage. Do you know if this is something which letting agents are known to check?

 

I look forward to your response.

[Nightmare4banks]

Mr Pipps in reply to your last post and in my view:

 

1.To begin with,your link is incorrect but never mind the main thing it is called:

 

RECEIVER UNDER THE LAW OF PROPERTY ACT (1925) or LPA(1925) RECEIVER.

 

Keeping it simple - this means that the receiver normally a firm of chartered surveyors takes control of the property collection of rents,issuing certificates if needed and carrying out valuations etc with the view of selling the property to clear the debt owed by the landlord.In theory this can be done without the need to go to court by the lender but normally a hearing does occur - outcome could be one of the following three - sometimes a combination:

 

a.Absolute Possession Order within 28 days.

 

b.Suspended Possession Order - this would mean that the landlord would pay the normal monthly mortgage instalments and a fixed amount per month as ordered by the judge until the arrears are cleared.If the landlord does not adhere to the order the lender can go back to court and exercise its right on the grounds that the landlord has defaulted.In practice,if the landlord comes up with the goods i.e.the arrears are paid up the order can be stopped.

 

c.No Action at all - as all arrears had been cleared prior to any hearing.

 

2.To confuse further,there is nothing to say that your landlord does not have a mortgage that has the consent to rent out but no provision for a LPA(1925) RECEIVER.In this case,you would be notified as mentioned before - letter to occupier and a bailiff would be appointed.

 

3.If the landlord did not have the consent from the mortgage company to rent out the property there is no duty of care owed by the mortgage company to the tenant as the tenancy is deemed unlawful.So the tenant would be evicted.

 

Anyway,I hope you find this information useful and read through the PM

I sent you.