Tuesday, 4 March 2008

What About Us?

Fame at last. Dovecot Towers and other similar developments are all over the media, illustrating some depressingly common tales of negative equity and bankrupted amateur property speculators.

Rentergirl is occasionally asked to contribute to TV and radio programmes about the property downturn, but when I mention that I have no chance of buying a home, the interest fades, and if I suggest that alternatively, reporters could highlight problems encountered by renters (aka landless peasant scum) the line goes quiet. The trauma endured by desperate owners is presented as a national scandal, but I wonder when anybody is going to remember this stark fact: for every buy to let repossession, a tenant is evicted.

I was chatting to my neighbour who explained that he had moved urgently from one flat to another the previous week. There had been a frantic banging on his door one evening: it was the letting agent, who explained he’d have to vacate his home, right NOW! The flat was due for repossession the very next morning!

So move he did; that night, all alone, rushing to shift everything he owned down the corridor to an identical flat allocated by the agent. He admitted to resenting the fact that he’d been struggling to pay rent to a landlord who blew the money, not on the mortgage, but booze, pies, or hats, never condescending to inform his benighted tenant about his precarious pecuniary circumstances. Fortunately, neighbour was dealing with that rarity – a sympathetic estate agent. He’s settled now, but still shaken.

The post-room, and often my post-box is often crammed with someone else’s letters, all opened, including mortgage forfeitures discarded by someone long gone from here. Gary didn’t know he was being evicted until he opened one of many angry red court orders ignored by his landlord. The flat - his home - was repossessed, after which the letting agent still pursued him for the final month’s rent, despite the building being flooded out, and when the landlord had clearly been pocketing Gary’s money. Mortgage brokers often don’t even know that flats are rented out.

Mortgages featured recently on an excellent edition of C4’s Dispatches. The games played with our money are so bafflingly complex, ‘blue sky’ and out there (if not downright stupid) that it took a wise old banker roughly twenty minutes to explain the fundamentals. Basically, banks lent money to customers so poor that even fiscal morons could predict they would struggle with repayments. Panicky lenders then tried unsuccessfully to claw their money back when borrowers defaulted. You don’t need to be a mathematical genius of the kind who can zip through equations which cover a wall to realise something fishy is going on, and it’s tainting my world by association.

Life for tenants is already uncertain. Landlords are an elusive bunch, and communicate with gnomic missives, ignoring emails, and rarely answer the phone. Tenants may suspect something is awry, but have no solid way of predicting whether their lord and master is prospering or dancing with bankruptcy. If the latter is true, they could end up homeless, and nobody will even notice; they’ll move silently and unnoticed to another buy to let property with a six months lease, hoping that too isn’t suddenly repossessed underneath them. Moving is a costly, miserable and unsettling nightmare with one beneficiary: removal companies.

Property speculation is a gamble. Investments might go down as well as up. I sympathise with owners who lose their life savings and pension plan, but the plight of tenants, booted out through no fault of their own is being ignored. As usual.

8 comments:

Anonymous said...

Penny, are you sure about this? I thought it was illegal to evict someone in legal occupation of a property without a court order. The court order must state the name of the person being evicted. Is my knowledge of the law out of date?

With new leases since April 2007 (if memory serves me right), deposits are protected to some extent. Repossession should mean that the tenant can reclaim the full deposit forthwith (with damages) since the contract has been broken by the landlord. This does not help much with pre-2007 tenancies if the landlord is bankrupt.

Cheers,

Dave

RenterGirl said...

Oh, I'm sure this is happening! Whatever the law says, even with safguards, it seems some buy tolet mortagages are unofficial (ie a couple move in together, and rent one of their flats).
Many tenants are used to moving now, and are too shocked/can't see the point of suing a bankrupt landlord.
It is appalling.

Anonymous said...

I don't think it is illegal to evict tenants without a court order. A friend of mine recently went through the repossession experience, only finding out the property WAS due to be repossessed after opening an 'angry red court order' addressed to their landlord (who hadn't bothered to come around and collect any of the previous ones). When my friend spoke to the court, she was told that a) they weren't allowed to attend the hearing as it was a 'closed court' (thankfully a nice clerk took pity on them on the day and they were permitted to see the hearing) and b) the mortgage company had no idea that the property was tenanted, the mortgage did not cover tenants, and therefore they had no legal rights other than a statutory notice period to evict (28 days, I think).

My friend and her partner had lived in their home for nearly 4 years. They had never defaulted on rent and had even put up with some serious abuses of their goodwill (including having to replace the fridge themselves, dealing with a faulty boiler for 6 months with the only hot running water in the house coming from the shower... etc.) The eviction really was a shock - even more so finding out at the court hearing that their landlord had been defaulting on his mortgage for years. He even had the cheek to phone them after the repossession and demand their last month's rent. They told him to keep their deposit and never contact them again.

The situation appears to be that if the mortgage company did not provide the owner with a buy-to-let mortgage, the tenants have no legal rights in the event of repossession. And as you point out, rentergirl, moving is an expensive and traumatic business.

Becky

Anonymous said...

Why can't we just stop people making a living from renting out second, third and seventy-fourth homes. Why do all my earnings have to go into the pocket of a very greedy man?

There are remote villages in Norfolk and Suffolk that are dead during winter because they are owned exclusively by the very rich who can afford beautiful sea-side views. Who only come to mingle in the summer season. It may sound very disgruntled of me but these used to be fisherman's cottages! Communities have evaporated because the rich landowner has laid his hands on these homes.

Like most people I don't fancy being with mum and dad until I'm 25, but how is there a way out of finding a place to put a bed without being ripped off!

I am with you all the way renter girl.

Ben

John said...

Fingers crossed, this is the year the Buy to Let scum like yourself will get their pay back. First Time buyers start demanding lower rents, and don't even think about buying until the market crashes and hopfully these Buy-to-Let SCUM will get what they deserve, repossession!

RenterGirl said...

I'm trying to get this nightmarish situation more exposure.
Becky - I hope your friends are settled, and safe now. It is so upsetting to be in that situation.
Please will anyone with a similar experience *and Becky if you coul dpelase ask your friends) could you email me with contact details (I wopn't spam you!)
rentergirl at g mail dot com
Thanks for your replies, and I am sorry to hear widespread this is.

Anonymous said...

Becky you make a useful point about the statutory notice to evict (28 days). I did not know this. It would be worth while having a public-spirited lawyer (who reads this blog) post what the tenant’s rights actually are. Of course unless and until the mortgage company serves the statutory notice in proper form the 28 days does not start to run.

I am amazed your friends said the landlord could keep the deposit – they should have asked for it back (now that they knew his address/contact details!) but offered as a gesture of goodwill without prejudice to let him subtract an allowance for any unpaid rent. He was in breach – not them.

Cheers

Dave

RenterGirl said...

I think its worth mentioning that yes, there are legal protocols/protections for buy to let mortgage deafult. But many landlords are ignoring their own situation, and choosing never to tell their own tenants. Who, as Becky's friends discovered, have no right to the court hearing relating their own repossession.
The law might have something to say about this in theory. Meanwhile, when tenants are suddenly confronted with bailiffs, what good is that?