Lending Merry-go-round – READERS QUESTION

What the solicitor says is correct as they can't control the signing of the tenancy agreement.Lending on empty properties means that the millions of pounds they do each year on remortgages is to empty houses. That's incorrect.

Talk to your broker they should be able to speak to TMW to come up with a solution. I'm with TMW tomorrow so can see what they suggest if you want?

Thanks Simon
We are the brokers in this case and have been in almost daily correspondence with the Mortgage Works, it doesnt help that our BDM is on long term sickness leave.I eventually got a response by writing to the CEO of Nationwide plus the Intermediary , Customer experience and
Mortgage Directors.We thought that the matter had been resolved when they came up with this condition.If you can mention this to TMW then I would be most grateful.
I intend to complain (again!) but its like talking to a brick wall.

Did you ask what purpose the condition serves ?

Whats wrong with the existing tenancy ?

Isnt a tenanted property better security for the lender than an empty property which may not be in a lettable condition ?

Difficult to tackle the problem if you dont know the reason for the condition.

We live in a free country so you are entitled to speak to or send a letter to the tenant to explain your situation. You don't need permission from the vendor to do this so surely a signed letter from the tenant outlining the situation you described re the years upfront payment etc would suffice.

In respect of TMW, just recently we have had problems with them too. We also had a different problem with another lender and although very different to yours it too was an impossible catch 22 situation, which in the end left us no other option than to pull out of the transaction which cost us nearly £2000 in fees and associated costs.

What is wrong with mortgage lenders at present? Do they want to do business with us or are they just using the money provided by the government (to get the housing market moving again) to settle their own bad debts?? Somebody really needs to sort this situation out as we have found it ever increasingly harder to obtain funds to continue developing our property investments. This must be strangling the life out of the whole PRS if others like yourself are faced with similar barriers to obtaining money for investment.

Good luck!

I have just had an awful thought and I really hope I'm wrong. However, it does appear that the vendor is trying to conceal something here. Could it be that TMW are making things difficult because they suspect this deal is an illegal Sale and Rent Back transaction? Have you checked Land Registry to see who owns the property, how long they have owned it for and who the previous owner was? Could it be that the tenant is the former owner and that TMW have done this checks and come to the same conclusion?

I think DC's idea of writing to the vendor is a VERY good one.

I wish you well with this and hope that I'm wrong but I can't think of another logical explanation.

In my opinion the lenders are right to be concerned

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Have you seen the Tenancy Agreement?

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The landlord has taken a Premium this means that the “ rent period” is one year

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When does the existing tenancy end?

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Is it an AST or a Company Let?

Supposing tenancy ends at the end of March. You take ownership at the beginning of February. You decide that you do not want these tenant to remain in the property. You would serve a Section 21 but the earliest date that you could ask for Possession would be the end of March 2014

I know taking rent in advance (a Premium) looks like a good option but it is fraught with problems. The lender is obviously concerned about their position if they need to repossess.

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I had a long and dirty fight with TMW over their incompetence and intransigence over an application for the Light Refurbishment product, which led eventually to the Ombudsman, where I lost my case. If I can avoid ever doing business with them again without cutting off my nose to spite my face, I shall.

Are you aware of the Appeal Court case coming up in March about advance rent and whether it is a deposit.
There is a distinct possibility that ALL advance rent will be considered to be a deposit.
Now if this is the way the court goes, that really will put the cat among the pidgeons!!?

Yes Paul I do know about that but we don't need to be concerned about advance rent for a "tenancy period" in other words a month in advance and rent due each month. The problem has arisen because landlords are using rent in advance to cover potential losses and taking for example 2 months up front and the next payment is due at the start of the second month rather than the third. If the rent was due at the start of month 3 that would be a rent period of 2 months and there would be no problem. It will be interesting to see how it goes but I would be very surprised if what I have said above is not confirm by this case and lets remember that landlords have caused the issue by trying to avoid deposit protection legislation.
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Hi Paul, yes I am aware and there are potential knock on consequences too.