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Sale of a flat on a fake buy to let - Freeholders concerns

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  • Sale of a flat on a fake buy to let - Freeholders concerns

    We are a small freehold company - there are 5 flats in the building & we manage the building ourselves without an external management company being involved.

    Since we jointly bought the freehold no-one has sold their flat - until now.

    Flat 5 is now being sold. This has been a long process with the buyers solicitor asking for endless documentation & the lengthy questionare to be completed - all of which we have provided. We were initally told a couple were buying the flat.

    At the end of all of this we were told that the flat was to be let. Our lease states that the landlord needs to give written permisson to accept tenants and the buyers solicitor is now asking for this permisson.

    However we have now discovered that the flat is being bought on a buy to let mortgage. The buyer wants to move his girlfriend in as the tenant on a 6 mth tenancy & a few months later move in himself.

    Our understanding is that on a buy to let mortgage the buyer is not allowed to move in himself so it appears that he is getting his girlfriend to pose as a tenant to appease the mortgage company. Apprantly he has taken out a buy to let mortgage as this is the only one he could get as he did not have the deposit for a residental mortgage.

    Our question is how this could potentially affect our freehold company? By signing a document saying that we agree to the let whilst knowing that the buyer plans to move in are we putting our company in a comprimising posistion? Is the buyer committing a fraud doing this?

    The solicitors seem to be going along with this and it is the buyers solicitor that informed us that the tenant would move into the flat "once the mortgage is finalised".

    Thank-you in advance for any help,

    Nicki (Freeholder, SW2)

  • #2
    Re: Sale of a flat on a fake buy to let - Freeholders concerns

    The thing is, I think you may be jumping the gun on presuming the landlord's intentions. You have no idea whether he is actually going to move in, and if he does, whether he's going to make that his main residence and therefore a normal residential mortgage and then move his buy-to-let mortgage to a different property.

    Unless there are any immediate issues relating to the buying and selling of the property, I personally cannot see how there would be a problem, because the problems you are concerned about relate to potential future motives of the landlord, of which you would not be in a position to ascertain.

    However, mine is not a professional opinion, so have a word with the company accountant to ensure you are covered under any potential eventuality.