BTL - Issues with renting out property. How to sell with major negative equity?

Hi,
Hope someone can help, here is the situation.

I owned my own apartment before marrying my husband. Once married I moved into the property he owns and that is our PPR (husband's income can cover this mortgage). My apartment turned into a BTL and we rented it out. There have been ongoing issue's with damp in the apartment and we have been unable to solve the issue. My current tenants are likely to move out soon (this happens with every tenancy) and yet again I will not have the money to pay the mortgage. The mortage on my apartment is already on interest only as I lost my job last year and the rental income never covered the full mortgage.

My question is that due to the issues in the apartment it is becoming un-rentable therefore I won't be able to meet the mortgage repayment. I think the only option is to try and sell the property. But with major negative equity I don't know how I can do this, property value is approx 75k and balance on mortgage is 192k.

1)Do I approach the bank and say we want to sell (as we can't meet repayments) and explain the circumstances and ask them to agree to the sale and if we can work something out for the balance on the mortgage after the sale??

2) Do I contact the bank and say we can't meet the repayments, to start repocession procedures and see if we can work on somehow paying off some of the balance of the mortgage??

Any advice welcome!!!

Thanks

I know you have not asked for advice on the damp problem, but it seems to be at the centre of the problems you outline-difficult to rent! The damp will also impact on ability to sell it and the value.

How old is this apt?
Do you know the source of the damp?
Is it from the roof? Walls? Ground? All these are owned by the Management Company.
Have you tried the Management Company?
What did they say?
Have you tried to pursue Homebond/Premier? You have three years cover for water penetration from roof/structural element with Homebond.
What did they say?

Hi Luternau,

How old is this apt? 4.5 yrs old

Do you know the source of the damp? Have been unable to locate the source, opend up walls and checked that damp proof is there (which it is). The last thing we did was upgrade ventilation in apartment as we were being told it was a condesation issue and due to tenants drying clothes etc

Is it from the roof? Walls? Ground? All these are owned by the Management Company. Duplex above property is empty but no damp on ceilings or upper walls. No issues that we can see with concrete floor and we did have an engineer out. (although in hindsight he was not the best but was quailified)

Have you tried the Management Company?
What did they say? Management company say its our problem and due to tenants not opening windows and drying clothes inside.

Have you tried to pursue Homebond/Premier? You have three years cover for water penetration from roof/structural element with Homebond. What did they say? Have not approached as don't know what is causing issue and we keep being told its not structural.

We are completely at a loss as to what to do with the damp, we have no more money to put into trying to fix the problem but at same time if we could do that it would be the best option.

It's sometimes very hard to find the source of damp.

Sounds like you are on the ground floor? Is the damp in the Walls or the floor or both?

Management Companies/Homebond blaming people drying clothes is a standard line. Sometimes it's correct, often it's not the cause. You would need to be drying a lot of clothes to cause significant damp-which seems to be your problem. However, it may e the cause. If so, you need to state on the lease that drying clothes in the apt is prohibited and that any damage from damp/condensation will be taken from the deposit/followed up on.

Firstly, you need rule everything else out. I would get back onto the Management Company and demand they conduct (at their expense) a professional survey.

The apartment is on the ground floor and we have someone coming out on friday to have another look but I don't hold much hope. We will continue to try to sort the problem out though as the thoughts of being left with a negative equity loan to pay off for the rest of our lives is daunting.

Even with the rental income we were receiving the mortgage was near impossible for us to cover so that is why we are on interest only on that mortgage. Without the rental income we will no go into arrears on our mortgage and I just wanted to know what the best approach to the bank is???