Banks poised to repossess a substantial number of buy to lets?

Litigation firm, Hagen Wolf has claimed that banks could be poised to repossess a substantial number of buy to lets due to the way the government has enabled an effective eviction ban.

This ‘eviction ban by the back door’ could mean many buy to let properties are repossessed by the banks.

The problem arises because the government claims that there is no eviction ban because the courts are open to process cases. Although, during lockdown and over the Christmas period from 11^th December until 11^th January no tenant can be evicted.

This will also apply to any area in Tier 2 or 3 restrictions meaning much of the country will be subject to an effective eviction ban.

“It means that even though the courts will process residential possession claims, up to and including a possession hearing, but tenants will not be evicted for an indefinite period” says the property litigation firm Hagen Wolf.

A statement from the company says: “Given that areas can be moved into Tier 2 or 3 overnight, this in practice means no evictions for the foreseeable future. However, that could change if the Lord Chancellor seeks to impose legally dubious exceptions. Good luck evicting anyone right now, or for the foreseeable future, whatever the reasons.”

The biggest problems are faced by landlords in areas that have faced the longest bans on evictions and have been running without rental income.

“The goodwill of mortgage lenders will only stretch so far. Without further government support or regulation, we anticipate an increase in the numbers of banks taking possession of buy to let properties, either through the courts or via Law of Property Act receivers. Fortunately, rights to a further three months mortgage holiday have been announced, but this means bigger mortgage payments going forwards” the firm states.

“If the lender agrees to a payment holiday, it may create some breathing room, and a tenant may agree to vacate the property and surrender the tenancy. Doing so will allow the property to be to re-let. Be wary of having an empty property for which you have not only mortgage obligations but also council tax and utilities” the company advises.

Before you speak to your lender, give me a call and I can help take you through your options. Payment holidays will be on your credit record and could affect future lending decisions.

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