Property solicitor: Problems for landlords

More landlords are requiring assistance from a property solicitor as unemployment and insolvency affects their tenants and puts their own income at risk at a time when many are also stuck on a high fixed rate mortgage plan or struggling to refinance. The consequence of these problems is borne out by the latest figures from the Council of Mortgage Lenders (CML) which show that as  many as 1,700 landlords were in need of a property solicitor in the first quarter of the year as their property was repossessed, representing a steep rise from 1,300 in the quarter previous to that.

The advice sought from property solicitors

Landlords already experiencing financial difficulties of their own are being squeezed further by tenants falling behind with the rent and are turning to a property solicitor for advice. The demand for property solicitors is being driven by the woes of tenants, indicated in the first quarter of 2009 by a jump in unemployment of 244,000 that was matched by the highest number of personal bankruptcies ever.

Such problems in the economy mean tenants are increasingly falling into arrears which can in turn mean landlords fall behind with mortgage payments, prompting the threat of repossession that a property solicitor can advise on. Property solicitors find landlords are particularly vulnerable in such a situation, explains Kesh Thukaram of, because of the cost of evicting a tenant and a lack of regulation in the buy-to-let market which means properties can be repossessed more quickly than for owner-occupiers.

It would also appear that property solicitors can expect further calls from landlord clients as CML figures indicate a continuing rise in the proportion of buy-to-let mortgages in arrears; the number have risen from 0.9% a year ago to 2.31% at the end of 2008 to 3.09% now. The number of people consulting a property solicitor as a landlord will also by swelled by those renting their homes as an alternative to selling them on at the bottom of the market. The National Landlords Association estimate that as many as 43% of residential landlords have entered the market in this way.

What a property solicitor can do

As is always the case with debt problems, a property solicitors will emphasise the necessity of confronting the problem head on. Lenders can be surprisingly understanding and, after all, repossession is a last resort for them to. Your property solicitor could therefore assist you negotiate with your mortgage lender to find an alternative solution. If you are one of the many landlords who has a tenant waiting for housing benefit to come through then your property solicitor could use this as a reason to defer payment for a bit longer.

If a tenant does commence bankruptcy proceedings then your property solicitor may be able to assist you in your right to distrain (instructing bailiffs to remove belongings from the tenant as repayment) for up to 6 month's rental arrears. Your property solicitor will, however, have to apply to the court if you want to forfeit the lease. Your property solicitor could also appeal to the administrator of a bankruptcy to disclaim the lease, which means that the rights and liabilities of the tenant end while yours continue.

As a precautionary measure you may want to take out rent guarantee insurance which will not only provide compensation for nonpayment of rent but could assist in payment for your property solicitor through legal expenses cover.

NB: None of this information should be construed as legal advice.

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