Unauthorized Rental Operation by My Neighbor Using Help to Buy Scheme - Strategies to Halt the Violation
Here's the rewritten article:
Ever wondered if your neighbor's skirting the law with their Help to Buy flat?
Hey neighbor! So, it looks like your neighbor is making a pretty penny by renting out their Help to Buy flat, but hold up - that's against the rules!
Now, I'm not gonna sugarcoat this, mate. It's a headache, isn't it? This nonsense with the communal car park and five tenants squeezing into a two-bed flat. I feel ya!
You've already contacted Homes England's fraud team and the council about the issue, but it seems like they're not giving a toss. Frustrating, right? I hear you.
So, you're thinking, "Is there anyone else I can rat this out to?" Well, mate, I've got some insights for you.
According to government data, a whopping 387,195 properties were purchased using a Help to Buy equity loan between April 2013 and May 2023. Some claim this scheme pushed property prices in England up. Remember, though, the Help to Buy equity loan scheme ran from 2013 until 2023. It's no longer possible to apply for a Help to Buy equity loan to purchase a new home in England.
First-time buyers could typically use the Help to Buy equity loan scheme to buy a new-build property up to the value of £600,000 (in England, not sure where you are). With this scheme, they could get a maximum equity loan of £120,000, or 20 per cent.
In Greater London, the maximum equity loan was £240,000, or 40 per cent. The loans were interest-free for the first five years.
When your neighbor purchased the flat using the Help to Buy loan scheme, he would have agreed to adhere to various terms and conditions. By subletting the flat in the manner you describe, he is in breach of those terms.
Now, I spoke to two legal experts for their thoughts. Here's what they had to say:
Olivia Egdell-Page, a property expert, says: Help to Buy was not intended to offer assistance to landlords or those with multiple properties. If your neighbor is found to be renting the home out without permission, they could face criminal charges, and may have to repay the equity loan assistance immediately.
However, in exceptional circumstances, renting the home out to a tenant is allowed. For example, when the borrower has to live away temporarily for work or to care for a relative. The borrower would have to apply for permission from Help to Buy, and get approval from the relevant mortgage lender and insurance provider.
It's pretty clear, though, that your neighbor's living situation does not fall under these exceptions.
I'm surprised that Homes England, which administers the Help to Buy scheme, has not taken action. I'd suggest you follow up with a formal, written letter to Homes England, requesting confirmation that your report has been logged and asking for an update. A formal, written trail can sometimes prompt investigation that is more active.
And if they still don't budge, it's time to get a little more radical, mate:
- Contact the managing agent or freeholder of the building. Most leases for Help to Buy flats specifically prohibit unauthorized subletting. The freeholder may have independent powers to take enforcement action for breach of lease, separate from Help to Buy.
- Raise the issue with Trading Standards. While they mostly handle consumer matters, illegal subletting tied to financial gain could fall under unfair trading practices in some circumstances.
- Check if the property is registered as an HMO. If five unrelated people are living there, it may require an HMO license. The council's housing enforcement team may investigate if no license exists.
- Complain to the Financial Conduct Authority. If the lender or Help to Buy administrator fails to investigate a clear breach of loan terms, you can escalate a complaint to the FCA.
While it might seem like a no-win situation, remember: persistence and formal documentation help. At the very least, a clear record of concerns makes it harder for the situation to be ignored if future issues arise.
Lastly, if all else fails, gather your neighbors, get some signs, and stage a protest - the power of the people can be a real game-changer. Keep fighting, mate!
Enrichment Data:
To report illegal subletting in a Help to Buy property and escalate the issue, consider these additional avenues:
1. Action Fraud: This is the UK's national fraud reporting service. While it primarily handles large-scale fraud, it may investigate cases involving deceptive subletting (e.g., identity fraud or financial misrepresentation).
2. HMRC's Fraud Hotline: If the tenant is not reporting rental income earned from illegal subletting, HMRC can investigate tax evasion.
3. Housing Associations or Lenders: Many Help to Buy properties involve shared ownership with a lender. If the subletting breaches mortgage terms, lenders may intervene to protect their financial interest.
4. Legal Recourse: - Solicitors: Engage a property solicitor to issue cease-and-desist letters or initiate legal action for lease violations. - Tribunal/Court: File a claim for breach of contract through the First-tier Tribunal (Property Chamber) or county court, depending on the lease terms.
5. Community Reporting: - Neighborhood Watch: While not an enforcement body, local communities can help gather evidence, but they lack formal authority. - Report to the Local Media: While not an enforcement body, media exposure can pressure authorities to act (use cautiously to avoid legal risks).
- While seeking a resolution, you might also consider notifying Action Fraud, the UK's national fraud reporting service, as deceptive subletting could potentially involve identity fraud or financial misrepresentation.
- Additionally, if the tenant isn't declaring rental income from the illegal subletting, you can report this to HMRC's Fraud Hotline for potential tax evasion investigation.
- If the lease for your neighbor's Help to Buy flat prohibits unauthorized subletting, and your neighbor continues to contravene these terms despite your efforts, the managing agent or freeholder of the building might have independent powers to take enforcement action for breach of lease.
- As a last resort, you could engage a property solicitor to issue cease-and-desist letters or even initiate legal action for lease violations, or file a claim for breach of contract through the First-tier Tribunal (Property Chamber) or county court, depending on the lease terms.
- Gathering your neighbors for a peaceful protest can also help draw attention to the issue, particularly if you supplement it with community reporting to Neighborhood Watch or reporting to local media, while being mindful of potential legal risks.
