Alternative to repossession and appointment of LPA receiver

The assignment of rental income by way of security can help protect lenders against defaulting borrowers.

Using this remedy means that lenders can demand that rent is paid to them directly from tenants which can then be used towards the account which is in arrears.  This also acts as an alternative to repossession and LPA receivership appointments.

If the property is in negative equity, the lender may be best served delaying repossession and using the above method until property prices once again rise to a level once where the lender will not suffer a shortfall should it repossess and sell.

It is also a feasible alternative to appointing an LPA receiver as such a receiver will only collect rent so the lender can do it directly and avoid extra fees. 
Some lenders of course may still wish to appoint an LPA receiver as it may not have the resources to deal with the administration involved with direct rent collection but at least this is an additional option.

The lender should ask the borrower to sign an assignment containing a fixed charge over the rental account held by the landlord together with an assignment of the landlord’s/borrower’s right to receive rent.

Some borrowers would likely welcome this as an option as it may mean that they get to keep the property until they are able to arrange their finances.

The security assignment must be registered at Companies House to bind liquidators and notice of the assignment must be given to the tenant.