Tenants suffer eviction fallout as number of repossessions rises in buy-to-let sector

Published on Friday 23 May 2008 21:13

WHEN tenants of rented homes are evicted it is usually for arrears, or excessive noise or damage (and in some extreme cases, all three).

But there is now a new and growing phenomenon: perfectly respectable and law- abiding tenants being forced to quit because the landlord has defaulted on his mortgage and the lender has taken possession.

The latest statistics from the Council of Mortgage Lenders on the subject revealed a sharp increase in the number of buy-to -let properties repossessed by banks and building societies.

So far, rental apartments make up a small fraction of the total of mortgaged properties repossessed and the problem seems to be more common in England than Scotland, but for each innocent victim the trauma is 100 per cent real.

In a major financial downturn, one expects this type of problem to manifest itself, but it could have been kept to an absolute minimum had financial institutions made stricter checks on applicants rather than hand out buy-to-let mortgages like confetti.

Not so long ago, the same rules applied to anyone – investor or owner-occupier – applying for a mortgage, with the applicant often having to jump through several hoops before a loan was approved.

But as increased targets made quantity count more than quality, processing became quicker, and cheaper, to the extent that almost anyone could obtain a mortgage just as long as they ticked the right boxes in the application form.

While no trading organisation likes to turn away business, on a few occasions my own firm has refused to take on some landlords as clients, no matter how well they meet the criteria on paper.

Anyone seeking to rent property through ourselves must be prepared to undergo a personal interview and on occasions something comes out that does not "seem right".

Declining to do business does not always mean we infer that the other party is dishonest or untrustworthy. We may simply feel a potential client may not have the proper "attitude" required of a landlord and this might, one day, impinge on our tenant clients.

Therefore, let us hope that one of the lessons to come out of the credit crunch is that the lending companies and institutions get back to basics when considering future mortgage applications.

&#149 David Alexander is the proprietor of letting and estate agency DJ Alexander