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Are YOUR tenants in breach?

Question mark formed by various pills

 

After contributing to part of a thread on a well-known property forum lately, I was intrigued to hear about a particular clause in relation to certain lenders’ mortgage ‘terms and conditions’. It relates to the situation whereby your working tenant…

…may lose their job and have to seek benefit help.

Many mortgage lenders’ critieria is based upon you having a certain ‘tenant type’ in your Buy-to-Let property. For most, the stipulation is that the tenant must be working. However, I was surprised (or perhaps I shouldn’t be…!) that if your ‘working tenant’ subsequently loses their job and has to start claiming benefits, that this would in fact put you in breach of your mortgage terms and conditions. If this were the case,

…you’d have to tell your tenant to get a job, or evict them!!

This would be, of course, if you were to literally take them at their word…! However, there are a couple of solutions to this phenomena occurring which include the following:

• Take out a mortgage in the first instance with a lender who will accept benefit tenants (Make sure you check with your broker carefully that this would be the case)
• Put in place a Rent Guarantee Insurance policy which would cover the potential shortfall from this type of scenario taking place

It just goes to show…

You must be on your guard and go into every deal with your EYES WIDE OPEN to every eventuality. Don’t they say…’the devil is in the detail’? Well, it certainly is in this case!

Have a great, enjoyable weekend. 🙂

To your property success.

Hazel

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