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Mortgage Advice - stuck in a consent to let nightmare!


dean_101

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Hi,

 

I am currently stuck in a consent to let nightmare and I was hoping I could get some help or advice. Any help would be greatly appreciated.

 

The issues I have span a long list, but I have summarized most of the issues.

 

In 2007 I bought a 1 bedroom apartment (new build/off plan) in Sheffield City Center for £106k (100% mortgage), myself and my wife lived there until 2010. In 2010 we bought a 3 bedroom house together. 

Because I was in a fixed mortgage for the apartment, I couldn't move to a different lender. So after failed attempts to sell the apartment, I decided to rent out the apartment.

But because my mortgage lender (Norwich and Peterborough) changed their products, there was not an option for a buy to let mortgage with them so it had to be a consent to let.

 

The mortgage for the apartment was roughly £600 per month (residential mortgage and also when it moved to a CTL). 

 

So the apartment was rented out under a CTL. The general rental  income in for the apartment was £500 - £550 per month. So there was a short fall of £100 - £50 per month. I also had to pay ground rent and service charges (£100 per month), along with landlords insurance and cover any damages (£50 per month). So a worst case scenario was £500 rent + £100 short fall + £100 service charge + £50 insurance. £750 outgoings per month, with £500 rent, leaves a short fall/lose per month of £250 (which was not ideal).

 

When the fixed rate mortgage expired I attempted to move to a buy to let with a new lender. The Zoopla valuations and near by valuations (from estate agents) put the property at £100k+ (Zoopla showed £120k+). My mortgage at this time was at £95k so I did have 75% LTV.

So I paid for a broker and a required valuation on the property, which came back as £85k, which was way lower than everyone's estimates. So I could not move lenders and had to pay the broker fees.

I continued to rent out the apartment, and continued to make the monthly loses.

In 2017 I decided to try and sell the apartment again. In June/July 2017 I got a buyer, for £95k (the apartment was on the market for £95k - £100k, £95k which was the lowest I could go).

This was great, but 3 days before the apartment was handed over the buyers solicitor discovered that the building didn't have a completion certificate. This totally took me by surprise and was my understanding that this should have been sorted when the building was completed back in 2007. There were 5 issues that caused the completion certificate not to be issues, 2 involved fire safety.

From this point (July 2017) on wards has been a battle to try and get these issues sorted by the builders the land owners and Sheffield's building control. I have spoken to (many) solicitors about this, but to take either my original solicitor or the builders to court would cost thousands. So I am currently waiting (on a waiting list) for the legal/financial Ombudsmen to look at this as my original solicitor from 2007 when I bought the apartment should have noted this and not gone ahead with the mortgage.

When I found out about these issues, the apartment didn't have any tenants (in a void period). I finally managed to get the builders to look at these issues.

 

During this whole time myself and my wife had to pay for some private health care, which ramped up to £20k. The original plan was to take out equity on our residential mortgage (we had £45k equity) to pay off this health care bill.

We approached our bank/lender and I was told that releasing equity wasn't possible. The option available would be to buy a new property, and use any money made to pay off the health care debt (which was a bank loan). Then get a new mortgage for the newly purchased residential.

We found a new residential property and had a mortgage in principle completed (with the plan to pay £20K off the loan). We went to the bank 3 months after the mortgage in principle was done. So we could check everything (before we sold our current residential). 

The mortgage on the new residential was declined. The basic outgoings (affordability check) caused an issue. Our residential mortgage was £370 per month, the loan was £260 per month, but because the apartment which was being rented out was classed as a consent to let, the rental income could not be considered. So that added an additional £600 to the outgoings. 

In total (as a base number) is £1230 per month.

 

Our other option was to stay in our current residential house, and just attempt to take out £20k from the equity, which would then be added to the apartment/consent to let mortgage which would take the LTV down, so I could move it over to a new lender on an interest only mortgage. A new buy to let mortgage would mean that I could pay the apartment's mortgage and also the loan payments (the rental income from the apartment would cover our outgoings i.e. the loan and buy to let monthly payments). 

 

But this was declined.

 

So the current situation I'm in is that I'm waiting for Sheffield Council building control to fix/check the issues regarding the completion certificate (the completion certificate still needs to be issued as 4 of the 5 issues have been done, the fire safety issues were the first to be rectified). I am stuck with my consent to let mortgage for my apartment because I cannot release any equity from my residential mortgage as the outgoings are too high (rent isn't taken into consideration with a consent to let) and I cannot sell the property because the completion certificate isn't in place.

 

I have spoken to many estate agents in the area and 1 apartment in the same building apparently sold a while ago. The buyer bought that apartment with cash. But If I were to sell (once the certificate is issued), the value of the apartments have dropped below market value (around £85k) which is too low for me to cover as my mortgage is £88k.

 

So if you have manged to read through all of this (which has been edited/cut down quite a lot), you can see it is a living nightmare. 

 

If there is any help of advice anyone can give, I would really appreciate it.

 

Thanks.

 

 

 

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