Accidental landlords to be targeted by lenders
Published by Sarah Ashcroft
Mortgage lenders in the UK are planning to begin a crackdown on accidental landlords around the country.
Financial institutions have become increasingly suspicious that thousands of people who did not originally intend to rent out a property but have done so for financial reasons are now keeping quiet about their new arrangements.
By doing so, they are avoiding higher interest rates and are not paying off a buy-to-let
loan as they should be. Failing to notify the bank of a change in circumstances is an offence and financial chiefs have decided it is time to act.
Lenders are now trawling the electoral register, social media websites and online letting agencies in the hunt for clues about the status of a home. If they suspect it has been put up for rent and the mortgage has not been altered to reflect this they will intervene.
Ray Boulger, a broker at John Charcol, told the Daily Telegraph: "Before the financial crisis lenders didn't often check whether borrowers were still living in their property, but they are increasingly doing things like checking the electoral register to see who lives at an address and looking on letting websites such as Rightmove.co.uk to see if a property is listed. These borrowers now run a much greater risk of being caught."
While the housing market is showing signs of recovery, there are still many people who are stuck in a position of negative equity and are finding it tough to sell their property. It is these groups that contribute many of the UK's so-called accidental landlords.
However, many may now consider that it is not worth taking the risk of being caught out, so notifying a lender of a change in circumstances is a wise move.
Mr Boulger summed up the problem by explaining that those who own 20 per cent of their home always have the option of moving to a better deal with another lender, but people in negative equity must accept whatever their present bank offers.
Published on: November 5, 2013
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