A landlord caught up in the ongoing cladding scandal faces the agonising decision of whether to take a huge hit on the sale of his flat or evict his tenants and move back in and live without his partner.
He can’t re-mortgage the one-bed flat in Colindale, London, as he’s unable to get an EWS1 form due to the large amount of HPL and timber cladding, timber balconies and missing cavity barriers on the sub-18m block.
His two-year fixed rate residential mortgage with Principality Building Society is up at the end of next month but it has told him he can’t get a buy-to-let mortgage without an EWS1.
“I was given a ‘consent to let’ before renting the flat out,” he tells LandlordZONE, “and this added 1% to my interest rate. They’ve now told me they’re unable to continue with the current arrangement but when I raised the point that the property is already on their books anyway they refused to proceed with my BTL application.”
Difficult choice
The landlord – a member of UK Cladding Action Group – has since tried more than 10 other mortgage brokers without success. He’s now stuck with a difficult choice: settle the remaining balance of £165,000 by 30th June, evict his tenants, sell to a cash buyer at a huge discount or allow Principality to repossess the flat and walk away from years of equity he has built up over the last four years.
“I can’t afford to pay the balance,” he explains. “My tenants are a young hardworking couple who have been absolutely golden.
“If I moved back into the flat to get a residential mortgage it would mean living apart from my long-term partner, so breaking up a family and doubling the cost of living for us as a couple.”
Like thousands of others hit by the cladding scandal, he has no idea when the remedial works will be carried out or how he’ll pay for it. He adds: “In the meantime, I’m staring at losing my financial security I worked so hard to achieve, having done nothing wrong.”
The government has trebled the fund to fix dangerous cladding to £5 billion but there is no support for hundreds of sites like these with non-cladding related defects, such as defective cavity barriers.
There is no point in Principality repossessing aa they will have to pay the remediation costs.
It matters not whether bankruptcy occurs.
The losses are the same.
Best to go bankrupt and be discharged in 1 year.
Price discovery will occur at an auction.
Many lenders will not enforce mortgage redemption as they know they will lose tens of thousands.
Far better for the owner to fet rid of the tenant and move into the flat.
Of course there is nothing to prevent the OO taking in a lodger.
Perhaps the former tenant!!??
There is nothing to prevent the homeowner from spending lits if days ‘visiting’ his partner etc.
Ideally he should attend his flat home at least every 30 days just to satisfy the block insurance conditions.
Officially the OO will receive no more than £7500 in lodger rent in cash only.
Nobody could prove otherwise.
The remediation costs will hopefully be manageable restoring full value to the flat.
Once done get shot of the flat and never have anything to do with any leasehold property especially flats.
Flats are dud property assets.
Apparently an EWS1 form only lasts 5 years.
Then what!?
It might fail the next EWS1 form!
Lenders WON’T wish to repossess as they wilm suffer dar more losses than the equity the owner would lose.
Bankruptcy means the lender can’t pursue mortgage losses for 12 years before the losses become Statute Barred from recovery.
Bankruptcy is a very effective way to beat the cladding costs.
Brilliant comment Paul.
But won’t becoming bankrupt affect his future lending?
And also his current assets?