Richard Harrison at Homeowner Management Services, a repossession-prevention agency, has seen a rise in the number of landlords seeking advice on LPA receiverships in recent months.
“We’re getting a couple of calls a week on this now. We had one gentleman who fell into two months of arrears by mistake. He offered to make six months-worth of mortgage repayments upfront to remedy it, but the lender told him to speak to the receiver – the receivers, of course, won’t give his houses back,” Mr Harrison said.
“Another client went on a family holiday to Spain. He had a house full of students. While he was away, he fell into arrears. The property was turning a £2,500 profit, but the bank appointed receivers who racked up £3,000 in fees in the first week. He now has to raise £8,000 or sell the property.
“You can lose your portfolio overnight, and homeowners are powerless once the receiver is instructed. It’s legalised criminality. We had a case a couple of months ago where a receiver sold a property with tenants in situ. It went for £250,000 at auction, when it was worth £450,000.”
MP calls for law to be strengthened
Back in 2010, MP George Eustice wrote for Conservative Home that “one of the most shameful things” about the insolvency industry was “the way receivers ‘cook up’ bills”.
“Too often,” he said, “it is just a cosy stitch-up between the bank and the receiver and because the whole process is so demoralising for the victims in such scenarios, such conduct often goes unchallenged.”
Today, Mr Eustice stands by this sentiment.
The MP for Camborne and Redruth told the Telegraph: “The law needs to be strengthened so that there is more court supervision of the powers exercised by receivers appointed under the Law of Property Act.
“If lenders needed to get a possession order from the courts before being permitted to appoint a receiver, it would bring integrity to the sector.”
‘All the banks wanted to do was call in receivers’
After losing all his properties by 2014, Mr Northrop started up a new company providing scaffold boards and furniture in Kent.
Now 58, the businessman – who has put his skin condition, vitiligo, down to stress – is trying to get back onto the buy-to-let ladder.
Unsurprisingly, however, lenders don’t want to touch him because of his past.
He said: “It haunts me. I lost everything. It was my lowest point. I had to rely on food banks. ‘Rich landlords, who cares’ is what we’re often told. But people have committed suicide over this. Others have died, having given up after being made bankrupt. I know one gentleman who lost 137 properties in Manchester and became a taxi driver.
“If I was given the option, I could have sold some of my properties to reduce the loans. My loan-to-value across the portfolio was only 50pc. But all the banks wanted to do was call in receivers to take control and sit on them doing nothing – which made the whole thing a lot worse.
“Tenants were on the dole so they stopped paying rent. It took years for the banks to evict them. I had to pay a £30,000 council tax bill during the LPA receivership period too. It was a total free-for-all.”