Thousands of leaseholders are stuck in their flats because they cannot sell due to unsafe cladding installed on their high rise blocks. Sales are stalled because potential buyers can’t obtain a mortgage until the defective cladding is replaced and the building declared safe by a specialist engineer.

In desperation “trapped” sellers, many of whom are young couples wanting to start families, or wanting to move away for their work, are resorting to letting out the flats at a loss.

They are then forced into renting elsewhere, or buying a smaller and cheaper property than they would otherwise have gone for. Property experts say the situation is so common and so serious that with so much wealth tied up in unsaleable property, it is reducing demand and depressing prices further up the housing ladder.

Flat owners are having to become landlords or so called “accidental landlords” costing them hundreds of pounds a year in addition to their alternative housing costs. This is because the rent they can earn on their flats does not cover their mortgage and service charges.

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In additional, they have the constant threat hanging over them that at any time they could receive a hefty bill running into thousand of pounds to fix the unsafe cladding.

A further issue for owners in this position is, they need permission from their freeholder and from their mortgage lender to let out their properties. What’s more, potential tenants will be urged to check out the fire safety situation of the building they are considering renting. There’s an obvious concern that they could be unknowingly signing contracts for potentially unsafe flats.

This could leave accidental landlords with vacant homes, plus they have a further risk that if tenants leave and they have a long void period they could find themselves in financial difficulties.

According to The Daily Telegraph Dr Lucy Coyne, 34, a vet, wanted to sell her flat in Liverpool to buy a house in Nottingham with her partner. But multiple sales attempts have fallen through due to the cladding issues.

So Dr Coyne was forced to rent out her flat, but the monthly rental income does not cover her mortgage and the building’s service charges and she expects to lose £600 every year until the cladding problem is resolved.

“I don’t want to be a landlord,” she told The Telegraph, “I’ve never wanted rental properties and I don’t want the stress of it”, plus she has the added cost of time spent managing and maintaining the property she no longer wants to own.

“My partner and I want to buy a property together in Nottingham, but we can’t because all my cash is tied up in my flat. Every time I think about the flat I just get anxiety and stress.”

There are significant costs and complications to becoming a landlord, and not everyone wants it is is prepared for it.

There are the additional fees mortgage companies sometime demand for letting, fees for energy performance certificates, legionella risk assessments, electrical and gas safety reports, smoke and carbon monoxide alarms, plus any upgrades needed to make the property suitable for rent. There may also be income and capital gains taxes complications to deal with.

All this not to mention dealing with agents or letting and managing the property yourself.

5 COMMENTS

  1. It is Karma.

    So many people who used to complain about landlords when they used to rent, they become accidental landlords themselves. Now they have to deal with unreasonable complaint from their tenants, large amount of losses and pay unexpected bills.

    • How do you know these current leaseholders are previous tenants?
      They may well have moved straight from their parent’s home, into a leasehold flat they’d “bought”…

      • I don’t but many will have experienced renting at some point in their life time while studying, working, etc. Probably a percentage would have also moved straight from their parents’ homes as you noted.
        The point is that we all could be in different position in our lives and we should be considerate.

  2. Presumably these leaseholders are now in negative equity?
    I’m sure the leases on these flats will sell for something. But maybe that sale would not cover the amount the leaseholder now owes their mortgage lender?

    I predicted that Grenfell Tower fire would cause problems with higher rise apartments in the UK, especially previously higher priced ones in London.

    But I was dismissed as a lunatic. That London was immune to any economic downturn, that there was nothing to worry about with leasehold apartments. I was old fashioned, out of date, etc.

    • I blame the government for this whole shambles.

      The government housing policy has been all about cramming people into SE England, to provide cheap labour supply.

      This, together with too much emphasis on insulation (“climate” stuff) and not enough common sense about safety.
      People are not suited to living in high rise blocks. We learned that back in the 1960s, or should have done anyway.

      It’s not just about fire safety, but also antisocial behaviour, stuff being thrown from balconies and windows etc. It’s just madness.

      The government created the planning laws and the building regulations, so the buck should stop with them.

      These high rise blocks are ok for hotels and offices, but totally unsuitable for general residential.

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