Ground Rent – Demand for Payment

I'm not suggesting they will foreclose Paul, simply that you run the risk that your lenders could appoint an LPA receiver to collect the rents.

Are you sure the demand for payment is from the actual Freeholder? Could it be a scam? I am aware of such a scam being carried out by someone who was not the freeholder, as the freehold currently resides with the Crown Estate.

No I pay the mortgage payments; well not all the time; I keep them on the end of the line!!
But I near enough satisfy things as far as they are concerned!
I agree if I let things get too out of kilter the lender would take action!
I've been playing the game for about 4 years now and it hasn't changed yet.
Course if interest rates go up I will be bankrupted, so I try and keep the debt as high as possible whilst still servicing the debt.
If I attempted to reduce the debt they would definitely try and foreclose and sell.
My strategy prevents them doing so.
Only another 18 years to go before I hand the keys back to them and say ta ta as I doubt very much whether the value in 18 years time will equal the loan debt.
Not much they would be able to do against a 71 year old!!
Especially as I WON'T have any traceable assets!!
Mind you I do the lottery and recently won £10, so you NEVER know!!?
I think my circumstances are essentially of being a zombie LL a bit like lots of businesses that are only keeping going because they can service their debts but not pay them down.
As soon as interest rates rise there will be financial armageddon in the UK as the true status of business is revealed.
Essentially vast portions of the economy will be proven to have no clothes!!!
Lots of LL will be brought down when this occurs including me!!
There will be lots of homeless tenants then!!
The other big issue is that in about a years time all those endowment mortgages won't be paid off and then another 10 years later lots of IO mortgages won't be paid off.Banks will have to make MASSIVE provisions for when this comes to pass.
I would conjecture they are already looking at 15 years from now to make those provisions on mass defaults.
Of course the lenders could allow the mortgage terms to be extended if the payments are still being made; but the banks aren't that clever and they will take the losses and go to the govt for another bailout; who are known to NEVER decline a bailout request from a bank.
Moral hazard doesn't exist for banks anymore!!
That should mean lots of cheap foreclosed property available for cash rich investors as normal purchasers still won't be able to meet the revised criteria.

how did you manage to get a mortgage with another 18 yrs to run if you are 71 now?

I have found some of Paul's posts in the past quite entertaining but I am completely flabbergasted by his latest posting and I would welcome Mark's comments as the moderator. I thought the whole idea of Property 118 was to have a professional forum for landlords to improve their practices, learn from each other and generally try and turn a business which hasa not had a great reputation in some quarters into a profession, held to account responsible by some sort of regulation but also benefiting from increased professionalism.
Like it or not, we all need banks to be successful so they can lend as society won't function if they do not do so. Bashing the banks and bankers for making profits (whether we think they are exhorbitant or not) is a ridiculous pasttime because it will not increase our wealth or opportunities if the banks are less successful and failure will lead to all of us having to bail them out.
It looks like Paul actually wants everything to come crashing down and I hope most of the 118 community wants it to get better so what we are creating in our own small way benefits our children.
To have a landlord actually come out and say that he is playing the system and is basically profiting from his loans and will hand the keys back when he is ready is mind boggling - not in a good way I am afraid
If I can just say to BoW the Crown Estate properties usually have high ground rents so scams are worthwhile. With the sort of houses the original correspondent was discussing these were usually large estates built by local authorities in the 40s, 50s and 60s and sold off on 999 year leases with ground rents of around £3. They were picked up at auction by freeholders in groups of hundreds or thousands and provided a small income from the ground rent and the opportunity for additional income from the grant of Consents for extensions or for Notices when a property was sold. Over the years the ground rents have little value and lots of people do not bother to collect them but rather try and sell the freeholds for £1,000 or something.

Hi Annette - I have had an email from another reader expressing similar concerns too. Paul Barrett makes no secret of the fact that he's "skating on this ice" in terms of his finances. I also suspect that many other readers will be in a similar position but will be too afraid to speak up. I do admire Paul for that and also that he does seem to genuinely appreciate the constructive feedback offered by the community. Many of Paul's comments are misguided but that's not a bad things as any misguided opinions he states are soon corrected by other highly credible people. Without people like Paul, we would never know how people are thinking or indeed be able to influence or offer guidance. I do not think for one minute that Paul posts with any bad intentions. I think he is a decent chap who's found himself in negative equity and tight cashflow. Equally, I believe that Paul wants to get things right but doesn't always have the money to do that. Many of the things he talks about, for example tenant referencing and RGI are very useful for people in his situation.

Yep you've got it Mark, I wouldn't wish my situation on anybody; I have been brought low by evil , cheating people when I should be a property millionaire.
I would not advocate to anyone the things I have to do to keep things together

I fully appreciate some may say I am misguided.

Unfortunately I don't have much choice.

I have to do what is necessary to keep the whole show on the road.

If the laws protected me then I would be skating nowhere., might be skiing somewhere though!?

Do we just play the white man and discuss things as they should be!?

What would be the point of that!?

Now don't get me wrong I am not bothered either way, I don't have to say a thing and just play the white man..

I am afraid when your back is to the wall and has been put there by lying, cheating, thieving tenants and others then one tends to become less moralistic and more pragmatic.

Those that tend to play the white man card are generally sitting pretty.

Hardly relevant therefore for them to comment; though of course all debate is useful.

When your back is to the wall your mindset by very definition has to change otherwise you WILL be gone.
I would conjecture that there are many LL in similar invidious situations who cannot think outside the box.
Such debate about these issues must surely be useful; but as intimated these LL take in the info but don't put their head above the parapet.
Any fool can keep their heads down!
How does that help fellow LL in a difficult place!!
Someone has to stick their head up.
I have only done so because the information, advice and perspectives from a variety of posters; professional and otherwise has been invaluable to me.
Whether poster disagree with me or not, is not really the point!!
I have NO ego to massage here; so I'll take criticism and disagreement with me any day of the week and consider carefully and adjust possibly mindset and ways of doing things.
If every LL at least viewed sites like this there would be a lot less stitched-up LL!!!
I would also add as far as playing the system is concerned.
Actually the system is playing me.
If the value of any property I have by the time I am 71 is not sufficient to pay off the loans what is it suggested that I do.
The lenders won't do the sensible thing and continue the loan term which would STILL be serviced.
If they want to be stupid rather than pragmatic then they will suffer for their dogmatism.

I think perhaps I would prefer my posts to be considered more commentary than advice.

I have NO professional qualifications and would NOT wish any of my posts to be seen as definitive; just commentary.

How long does it take one to become an experienced or professional LL; I have been in this game for 5 years and have experienced a lot!! but would NOT call myself experienced.
And as for professional; I consider myself a rank amateur!!
All I can do is try and learn from other parties to try and become as knowledgeable as possible; they do say Rome wasn't built in a day!!!??

Blimey; old before me time!!

No I'm not getting me pension yet.

I will be 71 in 18 years time which is when the mortgages have to be repaid; which I doubt I will be able to do.

To recover my original capital investment each property would have to achieve a in value of £245000!!!!!!!

What do you reckon the chances are of that!!!?

They might have sufficient value to repay the loan of each property; but I doubt it.

For a couple to be able to buy one of my flats they would need to jointly earn about £70000 and need a deposit and conveyancing monies of about £40000!!!

Can you see anyone being able to do that in the next 18 years; cos I can't!!

I would not sell at loan debt because I don't need to.

It is a zombie loan which I hope I never have enough to pay it off; but in the meantime there should be sufficient positive cashflow to keep the whole thing going.

For my particular financial circumstances there is NO point in my having ANY traceable assets which have EQUITY on which charges could be applied.

So I keep the debt up as much as possible to prevent any glimmer of equity.

I hope the UK is in recession for the next 18 years!!!!

Which when you look at Japan is not a totally unrealistic possibilty!!!!!

Thank you all for your comments, suggestions and advice – this certainly has turned into a lively discussion thread!!! Thanks Mark for facilitating this discussion, I think it’s an area that may raise its head again as I’m noticing more of these Freehold Titles appearing on auction sites.

I have now managed to contact the new Freeholder and they seem a reasonable company to deal with. They were able to provide me with sufficient details to confirm their validity as the Freeholders and also banking details so I could pay by a transfer rather than cheque, which also offers be the option of setting up an annual standing order, as Annette suggested. So given all this I have paid the full amount including a couple of years arrears that I didn’t owe (£4.50 worth!!!!) to get everything back on track.

Looking into this subject has certainly been interesting over the last few days; as the legislation is a minefield of contradiction and president. Add to this that my property is in Wales and the Welsh Assembly Government have made their own changes to Section 166 of 2002 Act.

Thanks again everyone

Merry Christmas
Huw