What you can do if you have squatters
Sam, are you sitting down? Do you know anything about a family renting your house in London? They have a tenancy agreement and say they've paid £3,500 to live there."
These were the words of my letting agent back in November, the day before my tenants were due to move into my property and the start of a couple of months of stress and expense as I went through the legal process of getting my property back.
I'd been unlucky. Up to now, finding squatters in a buy-to-let property has not been a common problem. It's difficult to get any figures as it's a perfectly legal activity and court orders to evict squatters are lumped in with other property-related matters, but, according to insurer Aviva, the numbers are on the rise.
"We've seen claims double on our legal expenses product, although we're seeing most of this rise on commercial rather than residential properties," says Matt Gordon, underwriting manager at Aviva.
Commercial and residential properties hit
But while it might be the commercial sector that's seeing the really large claims, owners of residential properties are also at increased risk. The feeble state of the economy and an increase in homelessness means more people are turning to squatting and, thanks to property websites, it's much easier to identify suitable empty properties that are either to let or for sale.
A new property scam, known as 'let-and-run', is also pushing up the numbers. This is where someone breaks into a vacant property, changes the locks and poses as the landlord. Unsuspecting potential tenants then hand over several months' rent and move into the property, with the bogus landlord disappearing and leaving the tenants to find out they have no right to live there.
It's difficult to know how widespread this problem is. In any event, it's essential that you act quickly to get your property back. "Unless the squatters can be persuaded to leave, you'll need a court order to get them out," says Suki Samra, partner at Lester Aldridge.
"Once you have an order for possession they have to go. Many leave automatically at this point, but if they don't you need to involve the bailiffs to get your property back".
An interim possession order (IPO) rather than a summary possession order (SPO) can speed up the process. These can usually be obtained within a few days, and once served, the squatters must leave the property within 24 hours. If they fail to do so, they will be committing a criminal offence and can be arrested.
It's not always a suitable solution, however, as an IPO can add to your costs. Cox explains: "You only have a right to vacant possession with an IPO. You still have to go back to court to get full possession and, until you do, you can't let the property."
Waiting times for courts and bailiffs can also drag out the process. Although I acted immediately, the earliest court hearing my solicitor could get was four weeks later – which can be quite normal in London.
Slightly less normal was the fact that, on the day of the hearing, one of the squatters, a heavily pregnant woman, turned up to assert her right to live in my house. Although there was much shouting and screaming, she was unsuccessful and the court found in my favour and
granted a possession order.
An expensive procedure
While evicting squatters isn't the sort of legal case that drags on indefinitely, it's easy to rack up a chunky bill. "It's an urgent transaction so legal fees can be high," says Steven Pain, senior solicitor at Moore Blatch. "Usually, they're between £1,000 and £2,000, although it's rare to pay more than £1,500, and it's possible to get them down to £750."
Given the costs involved, insurance is important. A proper landlord policy rather than a bog standard residential one is essential if you're renting out a property, but it's worth checking what cover you would have if you did get squatters.
While there is cover out there, many policies are seriously lacking in the event of squatters moving in. For example, I thought I'd be able to claim for loss of rent as my tenants were due to move in the next day, but this only applies after events such as a fire or flood.
You can also come a cropper with some legal expenses policies. Some will only pay out once they have granted indemnity, rather than at the point the insurer is notified of the claim. This can be pretty harsh when speed is of the essence.
Similarly, if your property is unoccupied, which is usually the case when squatters take up residence, watch out for any restrictions on your damage cover. Gordon explains:
"Depending on the policy, you may need to comply with certain requirements if a property is unoccupied. This can include things like a weekly check and replacing any broken windows. Once a property has been empty for the long term, typically over 12 months, it might not be covered for damage any longer."
Keeping squatters out in the first place is definitely the best way to tackle this problem. Decent locks and security are essential, but Wood also recommends making the property look inhabited. "Keep curtains drawn and put a light on a timer. It's also worth keeping an eye on the property when it's vacant," he says.
Hopefully, my property nightmare will be over by the time this is published and I can get back to the usual niggles of being a buy-to-let landlord – leaking showers, unpaid gas bills, and exactly where I am going to get a good deal on my next mortgage.
An Initial Public Offering is the US equivalent of flotation, and is the first sale of equity in a private company in the form of shares (know as stocks in the US) to the public in order to raise capital to finance growth.
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.