A landlord has lost out on a £300,000 deposit when he bought a property in east London and has since been forced to pay more than £1,000 more than he agreed to rent it for.
It is the latest in a string of land deals where landlords have been forced by courts to pay out more than they had agreed, with tenants forced to repay more than their landlords.
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The court case involves a building company in Newham, north London, and a group of tenants who bought an apartment in 2010 at a reduced price and had to pay £9,000 a month rent.
But when the building company went into administration, the tenants had to take on an additional £1.5m to pay their share of the rent, meaning that they now have to pay almost £900,000, including interest, as rent on the new property.
The group were able to recover part of the deposit from the lender, but the remainder has now been recovered by the Landlords’ and Tenants’ Alliance, an umbrella body for landlords, tenants and social tenants.
They claim that landlords have to be aware of the “risk” of their loans and are under pressure to make sure they are in compliance with the terms of the deal.
“Landlords are in the business of making a profit and we want to ensure that we are in a position where we can make a profit,” said Mr David Leung, a spokesperson for the Landholders’ Alliance.
“In the case of this property, landlords have put themselves in a financially advantageous position, which they may not have been prepared to make.”
The landlords are also looking to recover money that has been deducted from their wages.
They have been told that it is a common practice for landlords to deduct from their pay for a range of reasons including “the value of the property”, “time spent in the property” and “the nature of the work undertaken”.
In recent years, landlords in the capital have been able to claim a further £1bn in “income support” from the state for their tenants, with the amount going to the city council and local authorities.
The Landlords and Tenents’ Alliance said that the latest settlement would not change their position and that they had been successful in ensuring that landlords were aware of their obligations.
“We understand that it can be difficult to know what the true value of a property is and that’s why we have worked to help the landlords understand how their rent is calculated,” said the spokesperson.
“Our message to landlords is that they must also pay what they are due.”
Landlords will have to disclose the terms and conditions of the lease to tenants before they can begin to collect their rent.
If you are a landlord and would like more information about how to comply with the new law, contact the Landlord’s and Tenant’s Alliance on 0800-331-1213.