Mortgagee's consent to sub-let [Archive]

ivrytwr3

02-01-2006, 13:54 PM

Bear with me please...............!

Last year my in laws offered us a great deal to buy their house. With me being in the Forces we thought that if we had to relocate then we would just let the property; so we contacted A & L for a mortgage.

I informed them of my concerns and was assured that lots of Forces people let and it would be no trouble obtaining the consent to let. So we went ahead.

Fast forward to nearer the completition date and i have been informed that my posting to the new house area has not been successful and i will be remaining where i am for the time being. I immediately contact A & L and as we have already spent money doing the house up, fees ec i tried to apply for the consent to let so i can immediately start the process of obtaining an agent, get the house advertised etc.

However, i was informed that i can only apply for the consent to let once the completition has took place; why? I can still stop the sale now if they refuse the let and save everyone a lot of trouble.

What is the criteria for a consent to let? Any tips on assuring the best chance for being successul in the application?

Why can't they say yes or no now???

I am very worried that having spent all this money the property may be sat empty for many years to come (i am tied to a 5 year fixed rate mortgage).

If all goes well, great, if not, then there is the real possibility of me facing financial ruin!!

Sam

02-01-2006, 14:37 PM

I was in a similar position to you when I remortgaged my flat 3 years ago. However I am not in the forces - I worked for an IT company and near to completion I had accepted a 2 year placement in Australia.

I informed Nationwide straight away and they said that although it would be no problem granting permission to let the property, I had to wait until completion to apply as they would not be able to give an answer before then. Simple reason being was that I was applying for a residential mortgage not a buy-to-let. I guess this is normal for all mortgage lenders.

I applied for permission 1 day after completion and there was no problem getting it as my reason was employment transfer abroad (I didn't even need to provide a letter from my employer but A&L might ask for this so best to have this ready). Three years later I am still letting as we are now working in the States. I have to re-apply for permission every year but they don't ask for any written evidence.

In my opinion I don't think you will have any problems with this especially as you are in the forces and don't always have a say over you can working - stronger case.

ivrytwr3

02-01-2006, 14:42 PM

Oh dear, what's this about a letter? As in my job things change at very short notice. I was informed that a few positions would be disestablished, as i had been there quite some time, i would more than likely be moving, hence the house buy in a different area.

However, i have now been informed i will be remaining for the time being. So therefore nothing official was ever made. I suppose i could ask my boss to pen such a letter, but i can't see them being under any obigation to do so as i made my decision based on a "maybe".

Bugger...............

Sam

02-01-2006, 19:26 PM

Hi

I understand how annoying and worrying it can be but here are a few things you have to consider.
1) No other mortgage lender will probably be able to give you consent to until after completion.
2) The fact that they have assured you that it won't be a problem should give you peace of mind. At the end of the day they know that if they give you the mortage under false pretense when you told them your situation and then you can't afford to pay back then you will lose your home. A reputable lender (which A&L is) would never put you in that position. Remember they are regulated very strictly by the FSA.
3) No mortage lender would allow a property to be vacant for 5 years as there would be problems with squatters and insurance. Remember they own more of your house then you do and would not put it at any risk either. Therfore if you can't physically be there then they have to let you let. They will ask for it to be through an agent and insist that you have an ast agreement but this is normal and I guess something that you would do anyway (that's what nationwide asked from me).
4) The worst they could do is put the mortage percent up a bit but again in my opinion this isn't common if they reason for letting is employment.

To give you peace of mind maybe talk to them again and ask for reassurance. Make a note of the person you spoke to and the date.

I have had lots of friends buy places and then move for work and they have never had any problems with any lender.

ivrytwr3

02-01-2006, 21:11 PM

the end of the day they know that if they give you the mortage under false pretense when you told them your situation and then you can't afford to pay back then you will lose your home.

Yes, that makes sense, i suppose it helps when your 'outside the box' to see anothers problems.

As for Mr Shed, we complete on 11 Jan, so although we could back out, we have come to far and paid too much to start again (also we are buying off our in laws and they need the sale to get their new home).

Thanks for the advice and tips.

curiousgeorge

27-01-2006, 19:25 PM

Just wondering how many landlords are letting their property without a buy to let mortgage and without permission from the lender. Is this risky?

Thanks,
George

Owen Money

27-01-2006, 21:40 PM

curiousgeorge

28-01-2006, 12:38 PM

Does that mean you wouldn't bother notifying the lender?

As the property is leasehold it will probably already have buildings insurance.

George

Ericthelobster

28-01-2006, 12:48 PM

It is not the lender you need to worry about - it's the insurance.

Insure privately with a company that is aware that you "may let in the future" and you will be covered.

Provided you keep paying the mortgage everyone is happy.

You're right about the insurance issue, sure, but wrong to say that the lender will be happy regardless if you keep paying the mortgage. BTL mortgages always have a higher interest rate than residential, and you are would be fraudulently depriving the lender of the difference.

P.Pilcher

28-01-2006, 15:59 PM

Should a borrower break the terms of his mortgage agreement then the lender is entitled to request immediate repayment of the loan. By letting out a residential property without notifying the lender and requestion permission to do so, such terms may well be broken. In practice, mortgage lenders reqularly give permission to let out a mortgaged property and may only require an appropriate level of insurance to be obtained.

In practice, few if any lenders are at all bothered about the properties securing their finance provided the repayments are made on schedule, so you may well get away with it, but as has been mentioned above, the appropriate level of insurance is a very good idea.

P.P.

eniacs

28-08-2007, 16:25 PM

Hi All;

Im new to letting and i would like to let out my home, i have bought using a offset 100% mortgage from natwest. I would like to let the place out as i currently work at sea and am rarely at home. I intend to use a agent and have the place unfurnished. Its a 3 bed semi with garage and front and rear basic gardens.
I see that agents say they require permission from the mortgagee for letting the property out. Why is this and is it likely they will give permission for it?

From their point of view the property is insured and i have allready proved to them i can pay the mortgage, so why not further guarantee this by having another income from which i can pay it?!
How many of you use agents and how many simply draw up a contract and place an add, managing the property yourselves? I take it if i managed it myself i wouldnt need to inform the lender, providing i had the correct insurance.

Thanks for any info, Steve.

Colincbayley

28-08-2007, 16:34 PM

From what I know, Natwest have a simple procedure, just drop them a line and advise that the property will be let on an 6 month AST and they should just send you confirmation back that it is OK with them.
Make sure you give them a forwarding address.
Don't do this and you will be in breach of your mortgage conditions.

If you are going to be out at sea most of the time, then I would use an agent.

eniacs

28-08-2007, 16:46 PM

Thats sounds like good news! Im very new to this... AST?

I would prefer a agent to look after the place, but i wont leave it empty for months on end, if the mortgage company wont let me let it then i will have to privately let it and change mortgages in the mean time to a lender that will allow it.

P.Pilcher

28-08-2007, 16:52 PM

This is standard practice. The idea is that a mortgage is granted to enable a person to buy and live in his own home. When it is tenanted, the risks are greater thus mortgage providers want more interest! If they grant permission for a property to be let, they may lay down more conditions with regard to the type of tenants acceptable and impose additional insurance requirements. Unfortunately some of these conditions show that the senior members of the mortgage providers concerned live in ivory towers and have little knowledge of the real world! Unfortunately, if your mortgage provider finds out that you are letting without authority they might repossess even if your payments are up to date (unlikely in the real world, but possible). It is this possibility that your agent is trying to protect you from. Providers of personal mortgages will often permit the property to be leased, particularly when the circumstance of the mortgage holder have changed (job change - relocation e.t.c.) and permission may well be granted in your circumstances. However if the mortgage provider refuses, don't worry! There are tons of mortgage providers who have made good money out of granting mortgages specificially to enable people to purchase property to let out. Thus if your mortgage provider no longer wishes to provide you with secured funds, then here are plenty who will. There are plenty of brokers advertising here who can point you in the right direction.

There is also tons of information on this board to help you select a property agent and the pitfalls to be avoided as the property lettings agent markt is totally unregulated.

P.P.

peterdo

28-08-2007, 20:22 PM

They may let you lease the property but you will have to ask for consent to let, however, with a 100% mortgage and also on off-set I freckon they will want to hike your interest rate.

As a general rule, most BTL mortgage companies will require a 15% deposit and will also usually require 125% of the mortgage payment as the minimum rent. In addition, the interest rates are usually higher than a standard mortgage.

I dont fancy your chances of getting NatWest to consent under the terms you are currently on...........out of interest, let us know if they do decide to give you permission!

Pete

P.Pilcher

28-08-2007, 20:45 PM

jeffrey

29-08-2007, 08:56 AM

Glossary: AST = Assured tenancy agreement. This is the document that your tenant will sign as a lease for your property. It will have a minimum validity period of six months (it needs to be no longer). Your agent will prepare this for you and your tenant when he finds one. Note what I and others have said about agents who insist on renewing such agreements when they lapse. It isn't necessary but merely enables the agent to make more money out of you and your tenant.

P.P.

Not quite! AST =
Assured
*Shorthold*
Tenancy.

You see, an "Assured Tenancy" means any tenancy governed by Housing Act 1988: not only AST but also SAT (Standard Assured Tenancy) which lacks s.21 basis for possession.

Probert31

23-11-2007, 15:36 PM

Quick question - what are the implications if a property was let and the landlord/owner did not inform their mortgage company they were letting it?

pcwilkins

23-11-2007, 16:31 PM

I believe that if LL is caught, lender can demand repayment of whole mortgage straight away. Basically, it's a bad idea.

Peter

davidjohnbutton

23-11-2007, 17:32 PM

BUT a lot of mortgagees simply demand the difference between the normal mortgage payments and a commercial lending rate as the risk is higher.

It really is not worth taking pot luck as to how your ML will view it - at worst they could demand the whole mortgage repaid at 7 days notice as a breach of mortgage deed and dispossess the tenant who in turn then can sue the wrongful landlord for breach of the rental agreement! Whilst the mortgage is secured on the property, the tenant could in theory and potentially in practice re-house his family in a hotel for weeks on end at the landlord's eventual cost - the bill could run into thousands of £'s

Horgro

10-01-2008, 21:47 PM

Hi.
Does any know the situation if you have a residential mortgage with a lender and you then decide to rent out your property? What are the legal implications if you do not advise your mortgage lender that you are letting the property out and are you legally obliged to advise your letting agent of the situation?
Many thanks

peterdo

10-01-2008, 22:16 PM

If you are on a residential mortgage, you have a responsibility to inform your lender of the change of circumstance. Most lenders will give you "consent to let" and will put you on BTL rates which will be higher than your current mortgage deal.

The legal implications are that you are breaching the contractual position, the lender would be within their rights to backdate the payments based on the higher rate. Not a good place to be as failure to do so would result in adverse mortgage history etc, it may also affect your ability to get another residential mortgage as the BTL property will show as a residential mortgage and will classed as expenditure thereby reducing your affordability of your own mortgage.

The letting agent will probably ask you to confirm that you have advised your lender but will probably not take it any further, they should also inform HMRC that you have rental income to declare.

Pete

Horgro

11-01-2008, 15:34 PM

Thanks for the feedack. The property has been rented out previously but I was looking to sell after the last tenants vacated so switched back to a residential and moved back into the property. As I have not been able to sell I have decided to rent again so wanted to know that the situation was with my lender. The HMRC are aware that the property has been rented previously and it has been included in my self assessment tax return so there are no concerns there. My main concern is that as the monthly rent does not exceed the monthly mortgage payment the lender may not give give "consent to let". I can afford to pay the shortfall myself so that is not an issue either. Plus the new let is a corporate let so I am hoping that would be favourable with the lender. Any more feedback would be appreciated.

Colincbayley

11-01-2008, 16:05 PM

Some lender don't like Corporate lets as these do not involve an AST. Other than that, why don't you just ring your lender and say you are 'thinking' about letting your property and what would be their view on the matter.

Horgro

12-01-2008, 16:07 PM

I have called the lender and out the question "I am thinking of renting out my property". They told me that they treat each case on an individual basis so I would have to go ahead and let them know but there would be the risk that I would not get the consent to let and lose my corporate let which is due to start at the end of the month.

Beeber

12-01-2008, 16:10 PM

If their criteria excludes company lets then the answer is yes. If their criteria is that they accept them, no.

I can't remember the full rules from my lender when I switched from residential to buy to let. It involved the payment of a £100 fee, couldn't involve an AST for more than 3 years duration and I think it required me to provide a letter from a solicitor or letting agent to indicate that the AST met their conditions.

alidee

12-01-2008, 20:04 PM

Hi horgro

According to NAEA coursework the mortgage lender can ask for the mortgage to be paid in full or even seek to repossess the property :eek:

I also think that lenders like to see the rent being 130% of the monthly mortgage amount that you have to pay. I guess that not a strict figure but gives you an idea.

Good luck with getting a tenant soon.

alidee

socarroll

04-06-2008, 13:04 PM

I will be traveling abroad very shortly (not working) and am looking to let out my flat while I am away. In order to finance my time away I was thinking about taking a mortgage break (have checked and am entitled to up to 12 months) whilst away and living off the rental income.

Is this allowed (legally)? What are the implications of doing this? Any advice would be greatly appreciated.

socarroll

04-06-2008, 13:11 PM

Must we inform our mortgage lender if we let it out? Even if it is a private let?

Mrs Jones

04-06-2008, 13:17 PM

Legally - I believe that to be the case.

jeffrey

04-06-2008, 13:20 PM

Must we inform our mortgage lender if we let it out? Even if it is a private let?

Every let is a private let!
However, mortgagees (lenders) offer better interest rates to owner-occupiers than to landlords. You're moving into the latter category, andf failure to obtain consent will be a serious breach of your mortgage conditions entitling mortgagee to demand immediate repayment of the total debt.
Ask for consent, therefore. If this is given subject to increase in interest rate, calculate if rent income will adaquately cover it.

Finally, as it is a flat, check covenants in lease to verify if subletting will breach that as well.

kayak

04-06-2008, 13:33 PM

You may also wish to look into NRL status as you will be residing abroad for over 6 months. It is likely that you will go over the tax threshold if you are not having to pay your mortgage and therefore will have to deduct 22% off any rental income you may be making.

HMRC will be able to help.

Kind regards,

John

Andy26599

01-08-2008, 13:13 PM

I recently moved in with my girlfriend, and decided to rent out my house. I went to a letting agent and signed up with them, and managed to get a tenant really quickly (within a few days). (they moved in on the 4th July)

The only problem was, I'd not yet been given a consent to let (this was finalised yesterday).

This wouldn't really be an issue, except that we're now looking to get a mortgage together on her house (currently she owns 50/50 with parents, but we're buying them out).

The mortgage advisor from the Abbey (where my own mortgage is) requires us to prove consent to let, and also proof of tenancy, in order that I can prove an income.

Will the fact that they moved in before the Consent to Let was provided be a problem?

jeffrey

01-08-2008, 13:34 PM

silvercar

01-08-2008, 13:37 PM

Andy26599

01-08-2008, 13:44 PM

If I read you correctly, you are applying for a new mortgage through a broker at the Abbey, who requires you to provide consent to let for an existing Abbey mortgage. Of course he does, the minute your application goes in Abbey will know you are letting without consent!

The fact the tenants are already there won't be a problem if Abbey agree, if they don't agree you have a big problem on your hands!

You should be using a whole-of-market fee-free broker anyway, rather than one that is tied to the Abbey. You have 2 choices, either apply for consent to let or apply for a new mortgage elsewhere, the other lender will probably only require that the rental income adequately covers the mortgage payments and won't be interested in consent to let.

I may not have been very clear...my mortgage (residential) is with the Abbey...I let out my house and tenants moved in on the 4th July, and then realised I needed some sort of consent to Let, which I now have (applied for on the 14th July, agreed in principle on the 27th July, paid on the 31st July)...

I'm getting a mortgage with the missus, and we've been though an independant mortgage broker who is a friend of ours...she's said that the abbey would be best for us, but we needed to provide the consent to let and the rental agreement...

My only worry was if they'd kick off about me letting out before eventually getting a consent to let...it was only about 2 weeks before I realised, and it was a genuine error on my part...

silvercar

01-08-2008, 15:54 PM

Can't see this being a problem at all. You corrected the situation within a month. Some people leave it uncorrected for years. You now have the correct paperwork so there is no current issue, I wouldn't lose sleep over it.

TenantsLuvMe

01-08-2008, 17:01 PM

How is the letting of your home covered in the AN terms of the mortgage?

They may be a clause that says, amongst other things, that the consent to let must not be unreasonbly refused by AN.

If so and if you get into a sticky situation, you could try arguing that AN are being unreasonable for the sake of a few weeks.

Jkrlandlordzone

14-10-2008, 12:37 PM

Hi all,

Does anyone know if it is a legal requirement to get permission from my mortgage company to let out my property?

stavros1

14-10-2008, 12:55 PM

dunno about legal but definately landlord should read the terms of his mortgage!

Paul_f

14-10-2008, 13:48 PM

If you don't then you will be in breach of your mortgage deed which in turn might void your property insurance. Don't even think about it.

Jkrlandlordzone

14-10-2008, 14:00 PM

Thanks Paul.

So does that mean I have to convert my mortgage to buy-to-let now?

MW1969

14-10-2008, 14:19 PM

Thanks Paul.

So does that mean I have to convert my mortgage to buy-to-let now?

It all depends what your mortgage says, you will need to read your Terms and conditions of mortgage offer. My provider allows you to keep the same mortgage deal but you pay a small annual fee for them to allow you to let out the property. Not all providers are the same though.

SALL

14-10-2008, 14:32 PM

It all depends what your mortgage says, you will need to read your Terms and conditions of mortgage offer. My provider allows you to keep the same mortgage deal but you pay a small annual fee for them to allow you to let out the property. Not all providers are the same though.

Do you know, which lenders allow to rent the property without changing the intrest rate or asking for a huge fee?

MW1969

14-10-2008, 14:54 PM

Do you know, which lenders allow to rent the property without changing the intrest rate or asking for a huge fee?

Mine was with Alliance & Leicester. I started off with a 5 year fixed mortgage with them, moved home but couldnt sell my flat so I asked them for a consent to rent. They do it on an annual basis and I think they charge me £90 for the year.

mazling

25-10-2008, 15:24 PM

My Mortgage lender requires a Solicitors or a letting Agent affiliated to one of the following trade bodies: ARLA, ARMA, NAEA, RICS or ISVA who specialise in lettings and management to prepare or approve the Tenancy Agreement, and to provide a Letting Certificate indicating that the Lender's conditions have been met.

The lender will supply the Letting Certificate for completion when the application has been processed.

Q: Does this mean that I can use a company affiliated to one of the above to draw up the tenancy agreement without me having to use a letting agent, with the view to avoid lettings and management fees?

Q: If so would anyone be able to point me in the right direction of such a company?

Many Thanks

Paul_f

25-10-2008, 20:47 PM

It's not difficult for a letting agent to provide a certificate who is regulated, as i had to do this on occasions. All that is required is that they produce a letter to the lender they have complied with their specific conditions.

What it really means is that the lender only trusts regulated agents to do the business which offers landlords and tenants a redress system if anything goes amiss. I endorse that wholeheartedly. Too many agents are runnig noff with money that's not theirs and but L & T are left high and dry, not normally so with regulated agents.

daveSTOP

04-12-2008, 18:39 PM

Hi im thinking of letting my house out, do i have to change my mortgage by law to buy to let. What would happen if i did not change my mortgage and got a troublesome tenant that i needed to take to court.

Paul_f

04-12-2008, 19:41 PM

1. You need permission from your lender or you will be in breach of your mortgage deed - you don't need to change anything else.
2. You will probably have to pay a charge to your lender, and possibly an increase in the rate.
3. If you don't get permission it will almost certainly void your buildings insurance policy, so tell your insurer too.
4. You need to serve a S.8 Grounds 1 & 2 Pre-Notice on any prospective tenant (it doesn't commit you to a tenancy if it doesn't proceed).
5. If you have a troublesome tenant then try and prevent it by referencing them thoroughly and don't be shy in turning down people; it's a dangerous world out there for the unwary.
6. You can use the on-site referencing service here which is very good.
7. If this is mumbo-jumbo then get a professional to do it for you, such as an ARLA/NAEA agent.

Izzycam

09-12-2008, 10:57 AM

really good advice.

dietcola

31-12-2008, 10:56 AM

great advice from paul above...

yes you should tell your insurers about the change in property license (this affected me when letting a flat roof property and shot up my premium, however the roof leaked latter in the tenancy agreement and was fixed without quibble....

Also homelet or other such compainies are useful in the holding and retaining of bonds etc...

understandably you maybe in the early doors of property letting and thus the more money you can save the better... however jump the hoops that require... you could look into some rent-back/sell-rent-back sell and rent back agreements (which would make you the landlord of the property in the eyes of the law):eek:

Terry22

08-01-2009, 10:10 AM

mind the gap

08-01-2009, 10:16 AM

Hi

I need to know how important the consent to let letter actually is!

We are in a situation where we cannot sell the house, cannot pay the mortage (due to split), the only way to move forward is to rent it out, we can cover the mortgage by doing this. We are all ready to do this, and then get a rejection of our consent to let from our mortgage provider.

Should we ignore this? Or should we let them know our situation and try and get them to change their mind?

What are the implications of ignoring it? How would they find out? Anyone else been in a similar situation?

Any help appreciated!
Thx!

Don't ignore it. If you go ahead and let without your lender's permission, this could be grounds for re-possession and it may invalidate your house insurance.

Go back to your lender and explain the circumstances - try to make them see that it would be in their interests to let you rent the property out. Offer to let them specify the kind of tenancy agreement and the kind of tenant, if that helps. Reassure them that you plan to reference and credit-check the tenants and that the property will be responsibly managed.

If you are confident you can do this 'live' then ask to speak to the person in charge of your mortgage, over the phone. If not, a well-drafted letter may be more successful.

Good luck.

socrates

08-01-2009, 11:40 AM

In these circumstances it is always best to call the lender anonymously and get an idea of their policy on the matter. At that point take a decision on what to do next.

In this particular case speak to somebody as senior as possible and tell them that your MP is very interested in getting involved.

Perhaps your original Mortgage Adviser can help - he may have contacts

Good luck!

Terry22

08-01-2009, 13:49 PM

erm, no, that wouldn't be true :)

I am willing to ignore the letter, but not go so far as to threaten them with mp's!

thanks for your replies though.

I guess a letter detailing the problem is probably the way to go, don't like the sound of re-possession. Would also cause problems for any tenant too which I wouldn't want.

How would the mortgage company find out though? I guess they don't go around checking houses they have rejected, and no paperwork would go their way, so can't see how they would find out?

Rgrds
Terry

Paragon

08-01-2009, 14:08 PM

They periodically send letters to your address e.g. reduction of interest rate. If it gets sent back to them by your tenants as no longer living there - they may get suspicious.
The only real downside to not telling them is that they may cancel your mortgage agreement and request that all funds be re-paid. That can be a serious problem if you are not liquid enough to pay it off.
You will need to change your property insurance to a landlord's insurance policy which will have liability insurance for renters and their guests attached to it.

drramanjett

12-01-2009, 17:01 PM

jeffrey

12-01-2009, 17:10 PM

Are there any letting agents that don't need consent to let letter, This is because I am moving home but have Mortgage with FD who have refused consent. I cant remortgage due to negative equity. :(

I have been hunting around for them . Any advice will be appreciated.

I have phoned 3 or 4 all of them said that they will need that letter.
1. This is a bit confused. Let's go back to basics.
2. L lets to T. The Agent for L is not part of this legal relationship.
3. You own a property on which the mortgage debt owed to the mortgagee (lender) M exceeds the property's value.
4. To let, whether or not you engage an Agent, you need consent from M.
5. If you let unlawfully, without consent, you are:
a. in breach of mortgage conditions;
b. risking repossession, even if you keep up monthly payments to M; and
c. also risking T suing you if repossession leads to the [unlawfully-occupying] T being evicted.

maidstone98

12-01-2009, 20:53 PM

Hi

I recently telephoned my mortgage lender to obtain permission to let my property. When i was speaking to the phone operator, she informed me that she felt it would not cost anything, but would reference it to the department.

I have since received a letter from the lender asking for £359 in order to gain their consent (citing reasons that they lent me the mortgage money based on fact that I was the sole person living there, and that normally I would have had to get a Buy to let at a higher rate of interest). Furthermore, they have informed me that should I want to re-negotiate my mortgage, it would then be on the basis that it was a 'let' rather than for personal dwelling.

Question: My 2 year fixed mortgage is up for renewal in June, but I really could do with renting my property asap as i have moved in with my girlfriend. Is it essential that I pay the £359 and obtain the lenders consent? As, although obviously I will be getting tenancy references etc and will get a decent tenant in (hopefully), I'm 100% that I'll be able to ensure the mortgage gets paid, even if a tenant defaults, thus althouh realising that in the eyes of the law I should ensure I have permission, surely as long as I pay the mortgage, then the lender should be happy?

Also, is the lender likely to be open to negotiation on the £359? (i.e. accept a lesser fee?)

Any thoughts greatly appreciated.

Cheers

Ol

mind the gap

12-01-2009, 23:37 PM

It is never wise to try to 'wing it' when it comes to mortgage lenders' conditions. If you go ahead and let it out without their permission and they find out (as they may well do), it would be grounds for re-possession and it may invalidate your house buildings insurance.

I advise you to pay the fee and then start negotiating with them about a renewal of the mortgage in June - you may get a better deal if you're an existing customer.

You are lucky to have a lender who is willing for you to rent the property out - it seems that there are quite a few who are are flatly refusing, at the moment.

maidstone98

13-01-2009, 09:18 AM

mind the gap - thanks for your advice.

compeltely agree i should obtain the lenders consent. my concern is that by paying the £360, my understanding is that if I want to change mortgage packagaes, then the property will be viewed at BTL. However, I believe if i stayed on the same package (my fixed rate expires in June, thus i'm assuming i'll switch over to standard variable rate), then I will be fine.

any more thoughts? damn lenders!

ol

jeffrey

13-01-2009, 09:56 AM

No, you cannot lawfully let without consent. That's what you agreed when taking the mortgage advance!
See http://www.landlordzone.co.uk/forums/showthread.php?t=15986

hunter

13-01-2009, 10:11 AM

Hi
....
Question: My 2 year fixed mortgage is up for renewal in June, but I really could do with renting my property asap as i have moved in with my girlfriend. Is it essential that I pay the £359 and obtain the lenders consent? ....

Ol

I think you should consider yourself lucky to a) been granted the consent to let because some lenders will not grant it and b) 'only' needing to pay £359 for it. I assume the SVR will not be that high once your fixed rate finishes in June. If you would take out a BTL mortgage you most probably pay 2.5% in fees (£2500 for every 100k!!!) Will your rental cover meet the required 125% and do you have 25% equity in the property? BTL mortgage have a max. LTV of 75% these days.

I recommend you look at the BTL mortgages on offer and then look at the offer from your current lender again. It might look a lot better suddenly;)

creditcrunch

17-02-2009, 12:52 PM

Dear All,
I let out my property 4 months ago after it failed to sell. I called my bank to inform them that the property was being put on the market as a let and they said I should call when the property is actually let out and from that date I would be given 12 months of grace to stay on my tracker mortgage and then I would have to switch to a BTL. My problem is that my tenant (a reputable company) wants the property for a foreign manager for 2 years and I have no concerns about their ability to pay. The rent payment is double my total repayment mortgage as my interest rate is almost zero so obviously I would prefer to stay put on the tracker as I cannot see any dramatic rise in rates for the next 2 years. Am I better keeping quiet and paying HMRC tax on the whole amount of yearly rental income less expenses (except mortgage interest) or is their a way of calculating the annual interest without alerting the bank. I have read on the forums that you can request an annual statement detailing the interest and repayment portions of your mortgage payments but I am worried that this would "remind" the bank that the house has been let. How can I get round this. I am pretty miffed at having to further enrich a bank which would have gone to the wall if it had not been bailed out by tax payers. Thanks for any advice offered.

jeffrey

17-02-2009, 13:03 PM

You must notify your mortgagee (Bank). Failure= fraud= criminal offence = probable prosecution. Don't invite it.

creditcrunch

17-02-2009, 13:23 PM

Thanks for the prompt reply Jeffrey. If I inform them do I ask for anything in writing so they can't turn round and say I did not mention it. Also is it normal practice that you are placed on the BTL rate. I have also read here that some banks charge you a one off fee (say £150) and allow you to remain on your residential mortgage). My bank wants me to move from a 0.69% to a 7% BTL mortgage.......surely they are royally taking the mickey!!!

TaxationPete

17-02-2009, 16:11 PM

Failure to notify a loan provider of the change of use can lead to them fore closing your loan and you loose the property and pick up financial penalties and charges. Banks and Building Societies vary a lot in how they handle this , some allow the residential loan to continue where the reason is due to moving due to work, intention to return to the property and various time limits. Your bank appears to have should there hand but they may soften before the actual change date. Regards Peter

silvercar

20-02-2009, 22:34 PM

You must notify your mortgagee (Bank). Failure= fraud= criminal offence = probable prosecution. Don't invite it.

Interesting.

I always thought that to apply for a residential mortgage with the intention of letting the property was fraud, obtaining money by deception, criminal etc.

But that letting a property that was your residential home was a breach of your mortgage terms and conditions ie a civil matter between lender and borrower and not a criminal offence.

jeffrey

22-02-2009, 23:36 PM

Interesting.

I always thought that to apply for a residential mortgage with the intention of letting the property was fraud, obtaining money by deception, criminal etc.

But that letting a property that was your residential home was a breach of your mortgage terms and conditions ie a civil matter between lender and borrower and not a criminal offence.
Well, fraud is a tort besides a criminal offence. However, I agree that unauthorised sub-letting (of an existing mortgaged property) is probably not a criminal offence unless any misrepresentation is given by mortgagor (borrower) at or after the time of sub-letting commencement.

londongirl

25-02-2009, 09:30 AM

Recap of situation. We instructed a letting agent to find suitable tenants for our property. Once tenant had received the keys and AST he proceeded to advertise property in local paper and consequently let our property on a room by room basis. He did not move into the property however, turned up every Friday to collect rent from 'his tenants' he stopped collecting rent once he found out that we were aware of what he was doing. The individuals living in our property refused to move out. We have served a section 8 for breach of contract and we understand from the court that we should be hearing from the courts in the next few days. It will be down to the judge to decide whether we have a hearing or if it will go straight to eviction.

first question - once we have an eviction date do we need to wait for the baliffs to attend or can we go to the property on that date and change the locks etc...?

question 2 - are we able to sue the original tenant for non payment of rent?

mandarin

06-03-2009, 16:09 PM

jta

06-03-2009, 17:09 PM

I am about to purchase a 3 bed mainsonette which is located nearer my long term sick mother and which I will be in a few days a week (her health dependant). It's also easy to get in to my work from there.

My brother will live there too and he WILL pay me rent although not at a profit and I doubt there will be a 'formal' contract. The rent will never exceed the mortgage interest.

The property probably would not be my "main residence" for tax purposes as I have another house too with my wife.

However, Northern Rock tell me it's okay to get the 50% mortgage I requested as long as I don't let it. The Northern Rock person said it's okay to rent to my brother etc and without a formal tennancy agreement in place, and by letting they actually mean formally for profit.

This is fine, but i'm a bit worried about this. Does it sound okay or do I generally need a consent to let for a lodger?

Thanks for any advice

This does not sound right!
Are you going to use this place as your main residence? If so, and you let your brother live there, then he will be a lodger with no rights of tenure. If you are living elsewhere, and only using the place intermittently, he may be able to claim he has a tenancy, there does not have to be a written agreement for that to be so.

You should speak to Northern Wreck again and get things clarified, if you are getting a non btl mortgage to fund the place it could cost you dear in the long run.

Graham_K

22-03-2009, 15:36 PM

Hi,

I am looking at potentially putting my property which I currently live in up for rent. I understand from my Mortgage provider's website that I have to inform them - or rather seek their permission... Can anyone tell me if this is a laborious process, or what I should expect from my Mortgage Company? If it makes odds, it's the Halifax.

Many Thanks
Graham

jeffrey

22-03-2009, 23:31 PM

Mortgage Conditions (owner-occupier mortgage) always prohibit sub-letting without consent. If consent is given, interest rate will be increased.

lakenakuru

26-03-2009, 11:03 AM

Hello everybody

Would anybody out there have any sound advice for me??

What I want to do is to take out a mortgage and buy a property with 2+ bedrooms so that I can rent out the extra bedroom/s.Up until recently I thought that the extra income to my salary would be a plus point however now that I have spoken to financial advisors/bank reps./brokers(you name it!)I have been told that most lenders do not even permit lodgers!Does anybody out there know of a mortgagee that does?
Most people have told me that if I were to do this the best thing to do is to keep it quiet..but if you choose to pay tax on the extra income wouldnt the lender find out..?I have never done anything dishonest and dont want to go down that route.

I also found out that lenders have actually taken that extra income from lodgers into account when lending you money in the past.Does this still exist?

Thankyou very much for reading this and hope you can help me.
:confused:

yaf201

26-03-2009, 15:47 PM

I have been told that most lenders do not even permit lodgers!
:confused:

Are you sure you've been told that they don't allow lodgers? Most don't allow subletting, but that is different from taking in a lodger. A lodger lives with you as part of your family, paying their way as any adult would, a sub-tenant doesn't but rents a room from you to which they have exclusive access even probably having a lock on the door.

If your income from a lodger is under 4 and a bit grand a year, you do not need to declare it for tax purposes. See http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804

lakenakuru

27-03-2009, 10:01 AM

1st of all thankyou to both of u for finding the time to reply.

I have read every post in this thread and unfortunatly did not come across one that gave me an answer..and so I chose to post my questions..maybe I overlooked what I was looking for..If so could you be kind enough to direct me to it moderator?
I am not interested in sub-letting but having lodgers..ie renting out my spare rooms and having them live together with me in the same house that has been bought by myself with a mortgage.

Yes yaf201..I was told by a couple of banks that they would not want me to have lodgers because they have rights and they wouldnt want the trouble to which I replied that after all my research I have found out that they barely have any...but it didnt change their mind!One of them actually told me that I shouldnt really mention it to them!
After hearing all about people using lodgers to pay off their mortgage I was shocked by their reaction in fact!I cannot understand why Im finding it so difficult.

Is there anybody out there who is actually doing this??If so who is the lender?
People have told me that there is no way the lender can find out about lodgers as I would still be living in the property myself and so every letter is addressed to me..Is this true?

Thankyou once again.

jeffrey

27-03-2009, 10:21 AM

A lodger (T) has - at most- only a personal contract with the owner (O). Mortgagees might nevertheless be unhappy about O (as a supposed owner-occupier) allowing T into joint occupation, because of the need to evict T in the event that O defaults on mortgage obligations.

Poppy

27-03-2009, 11:16 AM

Next time you deal with officious institutions and you have queries about potentially sensitive matters that may or may not preclude you, don't be so open. Call the officious institution anonymously and/or do some digging on t'internet. Then decide if you want to proceed.

Suggest that you drop the matter. Obtain the mortgage (as long as there is no express clause forbidding lodgers). Buy the property. Live your life (with/out lodgers). Definitely don't give your lodgers any rights and keep any notice period very short. Pay your mortgage religiously. Let your buildings/contents insurers know if you have lodgers.

lakenakuru

30-03-2009, 09:05 AM

Thankyou for your reply poppy.I am currently spending all my free time doing research on the net but havent really come to a conclusion at all.I still dont know if there are lenders out there that actually permit lodgers.I seem to come across recent articles telling you that lenders dont usually have a prob but when it comes down to it this is not the case

Im not the type to do anything wrong.If I am to do it then I will only go about it the right way...ie pay tax and inform the lender and insurer.Maybe Im too honest for my own good.Having said that thankyou anyway for your advice.Have a lovely day.

susu

15-04-2009, 20:35 PM

Hello everyone - hope someone can answer my question as my head is about to explode with it all!

The scenario is as follows......

My husband and I have a joint mortgage on a house. We no longer live in the house due to relocating up north for work. We now live in my husbands batchelor house which is in his name only. We tried to sell the joint house but could we have picked a worse time?? So as we couldn't sell it for what we wanted we went down the rental route. We found someone who was interested and so went to get our joint halifax mortgage changed to a buy to let. I was astounded when I was told it would cost £11k + £1k admin fee to switch the mortgage over. (We are 1 year in to a 5 year fixed rate)
I have since learned that if I was to change the mortgage to my name only and get a consent to lease form, then I am allowed to rent it out. Does anyone have any experience of this? Can I go back to the same halifax advisor and tell him what I want to do or is it wrong to do that when I have already made the enquiry about the buy to let? (He printed the forms out but we haven't signed them so surely it will be on the system what we are wanting to do?) Does anyone know how much it costs to get a consent to lease form and can they refuse it?
Hope that all makes sense! I'm confused!

Thanks in advance
x

bino33

27-05-2009, 07:46 AM

Hi all,

Just a quick one to run by you to get some thoughts on the subject of Consent to Let.

I'm currently on a lifetime tracker mortgage which follows the BoE Base Rate - and sits at 0.99% presently and I've had it for 2.5 years. I'm looking to move abroad for a while and rent out my property for a while (which has about 85-90% equity in it). I've applied to my lender for a Consent to Let - and they've said I can have one, but must pay an admin fee of £3,900 to get it! :eek:

I'm thinking I might bite the bullet and pay the fee, as I know I'm saving at least >1k per month compared to any BTL deals out there (or any other current residential deals for that matter!). Any other thoughts on this though??

Cheers!

Poppy

04-06-2009, 10:45 AM

A few thoughts:

By all means explore the mortgage market with a whole of market mortgage broker.

You could try negotiating the fee downward with the lender. This may be the quickest and simplest thing. Try to get it below £500.

If you stay with your current lender, they may alter your interest rate upward.

Your lender will want to be convinced that the gross monthly rent exceeds the monthly mortgage payment. Some lenders require as much as 125% coverage as a minimum. It varies depending on the lender and how scared they are by the current climate.

asquithea

05-07-2009, 19:36 PM

Question: Why can't you sell the property?

The market appears to have temporarily stabilised, but prices could (and probably will) start drifting downwards again. If you price correctly, there's no reason why you wouldn't be able to shift it quickly, and then you're not left holding a depreciating asset.

Beware of jumping into letting unless you can afford to cover 6 months' non-payment by a tenant, and maybe £5000 of damage. Tales of woe abound on this forum, and it can take a long time to evict a tenant who can't or won't pay the rent.

silvercar

06-07-2009, 08:28 AM

The first thing to do is to ask your mortgage lender without giving your name - at least then you will know how the land lies.

If you did let a property that you have lived in as your main home without consent, then you are breaching a term of your mortgage. This is not fraud (obtaining money by deception) as you obtained the money on a genuine basis. It would be a civil matter between your lender and yourself. The lender would be within their rights to impose a charge to allow you to let or increase the rate. Theoretically they could call in the mortgage, though I have never heard of a lender going to court to repossess on the grounds that the borrower has kept up with repayments.

You may want to think carefully about whether you can afford to make up the mortgage payments and deal with tenants and maintain the property and comply with all landlord obligations. The last thing you need is a tenant suing you for breaking a contract if you did get repossessed.

As far as letting agents go, I doubt many require seeing proof of consent to let, mainly because lenders haven't come up with a standard certificate that can be shown - they usually supply letters that give far more details than you would necessarily want to reveal to tenants or leting agents.

It is important to get the correct insurance, pick a company that provides insurance to owner occupiers rather than building.insurance.for.let.properties and the lender would be none the wiser.

Consider where the mail from your lender will go. Your tenants may not be happy to receive mail at the property, so royal mail redirect is essential.

dominic

06-07-2009, 09:50 AM

Rosco46

06-07-2009, 12:43 PM

I am letting out my flat and have been told that I have to get permission from my mortgage lender who will also charge an extra 1% on my mortgage (the lender happens to with an institution which was recently fully nationalised by the UK Government and as a result they are not offering any new products or deals). What are the implications (financially and legally) for me if I do not bother to get their permission? (The let is going to be for 1 year max.)

dominic

06-07-2009, 12:55 PM

In theory:

You will be in breach of the conditions of the loan you have with your lender, and they could be entitled to exercise their right of repossession under the mortgage.

In practice:

Provided the lender is paid when due and in full it is unlikely they will make any investigation into the occupancy status of the property nor seek to repossess as it makes no commercial sense.

In terms of criminal liability, if you took out a residential mortgage with the full intent of using the property as such, it is unlikely any criminal offence has been committed (beyond reasonable doubt) in having to adapt to circumstances by subletting.

godolphingirl

06-07-2009, 13:58 PM

We have been unable to sell our property (it has been up for sale for six months) we have reduced the price but nothing!!!!

We have now decided to move in with relatives and rent out property for a bit.

We are with the Halifax and we have just come out of our fixed rate mortgate and are now on their variable rate of 3.5%.

the Halifax have told me that they will give us consent to let but want to fix the rate for three years at 5.09% and charge us a fee of £999.00. We can get a good rent for our house but this hike in rates basically means we would rent it and breakeven and the whole idea was to put a bit away each month to pay off some of the mortgage each year.

Does this sound the norm as all the research i have done has said that there would be nominal fee to change but the product would stay the same. Would i be better to change providers and get a straight buy to let mortgage as we have a lot of equity in the house. Would they come down any if i said i was moving away from them? it just seems such a hike

hope you can help as i am floundering here a bit

jeffrey

06-07-2009, 14:11 PM

As you say, you need to compare the respective costs of:
a. remortgaging (as a BTL) elsewhere;
b. remortgaging (as a BTL) with Bank of Scotland's Halifax Division; and
c. not remortgaging but merely switching to the 5.09% rate and paying the £999 consent fee.

rajeshk4u

07-07-2009, 13:00 PM

1. If you fix the rate for 3 years and if the housing market improves during this period, then you may have to mortgage redemption penalties to the bank when you sell.

2. If you are willing to share accomodation with family. Then why not get a lodget instead? (if the place is big enough...).

3. Once you rent out, you will need to refurb again just to make the place sellable or look fresh....

jeffrey

07-07-2009, 20:45 PM

Get mortgagee's consent; you'll sleep more soundly. Why be a cheat?

trev0712

08-07-2009, 11:01 AM

Hi All,

Brand new to the forum, and have a couple of questions, that hopefully someone will be able to advise me on please.

We live in a semi-detached house (1 of a pair) and have effectively no mortgage after 8 years (outstanding balance offset by current account) - hurray:p. We have the option to purchase the other semi-detached for £137500 and would need a mortgage for approx £95k, and in the long term would consider making a larger house from the 2 semi-detached. In the short term we could consider renting the house out to cover the mortgage costs.

Questions :-
i).Could we combine this mortgage with our existing one, if the lender is okay with this, explaining what we wanted to do?
ii). Would we have to obtain a buy-to-let mortgage for the other semi-detached, as the other option could be we just pay off our mortgage with the current account balance, and could then take out a normal new home-buyer mortgage for this other semi-detached?
iii). Do we tell possible Lenders of our future intention to combine the 2 houses into 1? Is there a separate mortgage product for this?

Any advice appreciated...we are going to see a broker to see about different products, but just wanted to go armed with some ideas as well.

Many thanks for any assistance :-)

Mrs Jones

08-07-2009, 11:12 AM

This is an interesting one.

If you raise the mortgage on your current house to buy the one next door, I don't think you will be able to offset the interest payments against the rental income. (Someone please correct me if I am wrong here...)

If you use some of your cash as deposit, and then get a btl mortgage on the other, you will be able to offset the interest payments (and other expenses) against the rental income.

I wouldn't worry about the joining the 2 houses into one until you come to the point of deciding to do this. You might need to remember that you may not get planning permission to do this. Might be worth checking before buying.

Spidi

09-07-2009, 20:15 PM

Dear All,

I'm hoping someone can lend me their experience with regards to the issues surrounding a Mortgagee's consent to sub-let.

About a month ago I fixed my residential mortgage for ten years with a large well known lender that was recently nationalised. However, now I wish to rent out the property and buy a larger second property; after being gifted some money. If anyone can lend me their experience on what this lender is likely to demand - I would be grateful.

From reading other threads here it seems they will request I pay a fee of a few hundred pounds and increase the rate by approximately 1% - obviously conjecture on my behalf.

If they do raise it - then it is unlikely the rental income will reach the 125% threshold in which case where would this leave me? Also, would any change to my newly issued mortgage [now constituting a different product?] require me to pay hefty penalty fees running into the thousands?

Any sensible input [please dont just tell me to ring the lender!] would be very much appreciated:o

silvercar

10-07-2009, 12:55 PM

You say don't tell you to ring the lender, but that is the only way you are going to find out. If you prefer ask on a no- name basis what is the policy.

Without asking the lender, there are a variety of possibilities:

a) lender says no;
b) lender charges fee and/ or extra percentage on mortgage rate;
c) lender gives you consent to let on a temporary basis.

jeffrey

10-07-2009, 13:13 PM

...or:
d. BTL remortgage.

jackboy

27-07-2009, 22:54 PM

I have a portfolio of houses on buy to let mortgages which i let out and 1 property on a residential mortgage. When i took out this residential mortgage i specifically told my broker that i would probably want to let it at some time in the future. They contacted Halifax who said I would be able to let it out and it was a standard feature that i had that option, but they failed to mention the interest rate change or admin fee i would be subject to. I feel this was unfair as i had a choice of mortgages and other companies dont charge as much as halifax to consent to let. If these charges had been more transparent i could have gone with a different lender.

I have had the mortgage for a year now and plan to move into my girlfriends house and would like to let my house out. However, after some research it seems that halifax charge a fee and require you to move rates. I pay 6% on the residental mortgage which seems higher than the rate somebody else on here was quoted to move to a BLT product but my main concern is that the property value has dipped slightly since last year and also the rent would not be 125% of the mortgage repayments. However, if i was deemed able to repay the mortgage through my income alone then surely if i also have additional rental income, which would equate to approx 95% of the mortgage repayment, then logically i can afford to make up any shortfall...?

My questions are:

Does anybody know what halifax are likely to say in this instance and what my fees/new mortgage rate might be? Would they require a deposit of 25% of the value of the property now the BTL market has tighter lending criteria? My residential mortgage has 15% deposit.

If i let it out without telling them (i know i will be in breach of the T&C of the mortgage and technically they can ask for the money back) but get proper landlord insurance will i still be covered? My understanding is that the insurance is not dependant on type of mortgage.

I feel annoyed with halifax as i believe they have mislead me to get my business and the extra charges they would try to charge were not made transparent to me when i first enquired.

Thanks

JohnS ResidentBroker

28-07-2009, 21:32 PM

The problem is that at the time of submitting the application most lenders wont commit to what they would charge should you want to apply for 'consent to let'. Most will say it depends on circumstances, status etc at the time therefore its almost impossible to compare what the best choice would have been.

John

cassandra

30-07-2009, 12:40 PM

I have recently lett my property through an agency. I had no knowledge that I had to inform my mortgage lender. Now I am rather worried and obviously want to inform them. My lender is Bank of scotland. Does anyone out there know their terms and conditions on letting? What penalties or fees I may be facing....please help:

silvercar

30-07-2009, 13:18 PM

cassandra

30-07-2009, 14:00 PM

Think carefully, what will you do if the lender says no? If the property is already let, you can't turf your tenants out. Having already got yourself into this situation it may be worth letting sleeping dogs lie, at least until the current tenants leave.

Yes but why would they say no to let? My mortgage is not that high and the rental would more than cover it. My mother passed away oct leaving her house to me with a mortgage left of £17,000 to pay and my husband split with me last year. Letting is my only way of being able to manage both houses presently. I have moved into my mothers house and I am considering selling. If I explained all this to my lender and ensured that there would definately be no problem in paying mortgage do you think they may allow this letting? I genuinely had no idea that I had to inform them and this is the first time I have let.

dominic

30-07-2009, 14:44 PM

Yes but why would they say no to let? My mortgage is not that high and the rental would more than cover it. My mother passed away oct leaving her house to me with a mortgage left of £17,000 to pay and my husband split with me last year. Letting is my only way of being able to manage both houses presently. I have moved into my mothers house and I am considering selling. If I explained all this to my lender and ensured that there would definately be no problem in paying mortgage do you think they may allow this letting? I genuinely had no idea that I had to inform them and this is the first time I have let.

As a condition to their consent they may increase your mortgage rate to soemthing your rent will not cover or that you cannot afford.

Telometer

30-07-2009, 14:51 PM

Lenders expect a higher mortgage rate from BTL properties as there are additional risks associated with them:

voids/tenant damage are much more likely with a BTL than with owner occupied.

p.garner9

30-07-2009, 21:46 PM

hiya with relation to the bank of scotland I had o morgtage with them on a property I lived in a few years ago. I had to go to work away so I wanted to let it off. I rang them and explained the situation-all they wanted was a £50 admin charge -they were fine with it
hope this helps

markd1982

18-08-2009, 12:22 PM

Hi,

I was wondering how important it is to obtain a letter confirming that your mortgage provider are aware that you are going to be renting out your property.

What are the implications on the landlord if this is not done? Also, what are the implications on the landlord's agent?

Thanks in advance for your help and I'll look forward to hearing from you.

All the best

Mark

P.Pilcher

18-08-2009, 13:29 PM

If permission from your mortgage provider to sub let is not obtained, then they can do all sorts of nasty things like repossessing your property, evicting your tenant and thus making you liable to legal action from your tenant for breach of contract.
In practice, mortgage providers do not police this and do not inspect properties which are securing the loans that they have made thus if your mortgage payments are made on time then there is little reason to worry as they will not find out what you have done. Some mortgage providers make a charge or increase the mortgage rate if a property is let out, so it's your choice - take a small risk and save some money or be a good boy and sleep even easier at night!

P.P.

markd1982

18-08-2009, 14:11 PM

Thank you for your quick response.

Do you know whether there are any implications against an Agent or would the penalties be solely against me if I were to be found out?

Many thanks

Mark

jeffrey

18-08-2009, 15:16 PM

Do you know whether there are any implications against an Agent or would the penalties be solely against me if I were to be found out?
You only- the Letting Agent is not bound by mortgage covenants, but you are.
Read this thread for previous advice on the subject.

plymwhite

19-08-2009, 10:24 AM

sorry ignore the thread title I meant building insurance

Hi everyone,
following on from my partners problems as posted on here recently, something else has just come up.
The landlords of my partners property have emigrated and it seems they never notified the mortgage lenders that they are no longer in the country.
My partner is worried that if things have not been done as they should have she may not be covered by any building insurance.

Can anyone offer any guidance on this situation ?

thanks

jeffrey

19-08-2009, 10:37 AM

Contact the last-known insurers and ask them.

Ericthelobster

19-08-2009, 10:53 AM

The landlords of my partners property have emigrated and it seems they never notified the mortgage lenders that they are no longer in the country.
My partner is worried that if things have not been done as they should have she may not be covered by any building insurance.Seems unlikely that a policyholder not being in the UK would disqualify the insurance policy on a let property (might be different if the policyholder hasn't even told the insurer that the property is let...) - but I have to ask, why the concern anyway? The buildings insurance is the landlord's responsibility, not yours; it's him who will lose out in the event of a claim being rejected, not the tenant.

jeffrey

19-08-2009, 10:59 AM

Whilst that is true, T may be subject to covenants in favour of a mortgagee (M) which oblige T to procure continued property insurance.
So any failure by L will expose T to liability to M. Presumably, M asked for its interest to be noted on the insurance policy.

plymwhite

19-08-2009, 14:48 PM

err... 1 thing I forgot to mention..... it would appear that the owners have failed to tell the mortgage lender that the house has been rented... hence the question about the builiding insurance

sorry to confuse everyone and thanks again for the replies

jeffrey

19-08-2009, 15:57 PM

'Failed to', hmm; or deliberately omitted to?

plymwhite

20-08-2009, 07:33 AM

merely forgot to

bit confused as to why anyone would think it was deliberately omitted ?:confused:

Ericthelobster

20-08-2009, 07:35 AM

confused as to why anyone would think it was deliberately omitted ?:confused:Usual reason - money. Interest rates on a buy-to-let mortgage are typically higher than for a standard residential one.

plymwhite

20-08-2009, 07:59 AM

So what to do now, partner has had a letter form the mortgage company seeking there whereabouts as they did not know it was let! Im guessing they will have to repay some money and also to the taxman?

Poppy

20-08-2009, 13:27 PM

Simply inform the landlord that letters have arrived in their name and enquire if they want them forwarded at their expense. Don't get involved with the buildings insurance, mortgage lender, tax people - those are not matters for the tenant to concern herself with.

I wonder what else this landlord has omitted to do? Possible matters that could concern the tenant are gas safety check, deposit protection, energy performance certificate. (I realise that some of these may not apply to this tenancy.)

The tenant needs to ask their landlord some very important questions and obtain satisfactory answers.

When is the end of the fixed term of this tenancy?

Mars Mug

20-08-2009, 13:35 PM

Doesn’t buildings insurance usually include public liability insurance also and if so is there a risk that the tenant could be seen as liable if the current insurance is void?

Poppy

20-08-2009, 13:41 PM

Not sure if I've understood you correctly. If there is building insurance taken out by the owner but it's void, why do you think the tenant would be seen as liable?

Mars Mug

20-08-2009, 13:46 PM

I have a vague memory of a thread which discussed public liability and the possibility of a tenant being liable, so thought that the point may be worth clarifying here where there may effectively be no public liability insurance at all. If there is no valid public liability insurance then the tenants themselves are at risk anyway, they would I assume have to sue the landlord for damages.

plymwhite

21-08-2009, 11:35 AM

The tenancy is up 31st October 2009. As far as she knows she has had the gas safety checks done and the deposit is in a scheme. Will the landlords be expected to pay back some of the money received for rent as they didnt declare it to the mortgage lender and tax man?

Thanks for all replies so far

Telometer

21-08-2009, 12:26 PM

Will the landlords be expected to pay back some of the money received for rent as they didnt declare it to the mortgage lender and tax man?

The person most likely to be in trouble with the taxman is YOU.

You should probably be withholding 20% of their rent and paying it directly to the taxman under the non-resident landlord rules. You have been paying it to them gross and the taxman can - and would - come after you for the tax.

Why you expect to pay your landlord less than you owe him under your contractual agreement I do not know.

Edited to point out that if they were filing a tax return they would have had no need to pay any tax on this income yet anyway.

Paragon

21-08-2009, 21:20 PM

How did it come about that you suspect that the owners of the property haven't notified their lender that they are renting out the property? And what makes you think they are not filing Income Tax Returns?

Maybe they have only left for 6 months. It seems every landlord I run into these days spends 6 months in Florida and 6 months (the summer) in London - the lucky sods. They all still pay their estimated taxes twice a year (Jan and July) thru their accountants.

theartfullodger

22-08-2009, 11:13 AM

I'd ask for a copy of buildings & contents insurance: If it isn't Landlord's insurance & the place burns down & you are 'orribly burnt then the (normal residential homeowner's) Insurance probably won't pay out...

Another point: Do you (assuming you are in Engerland & Wales) have a notice from LL giving you an address in E&W to "serve notices" relating to the tenancy?? If not then the rent is not due!!! Landlord & Tenant Act 1987, Section 48.
- see
http://www.landlordzone.co.uk/landlord%27s_address.htm

Cheers!

Lodger

taxibird

09-09-2009, 17:07 PM

can a lender repossess a property which is rented out, and not had permission obtained?

lender refused to give permission last year, had to move due to sickenss, had to be 200 miles away for med to long term.

thanks in advance :)

P.Pilcher

09-09-2009, 17:47 PM

If mortgage repayments are not maintained on a property then, indeed the lender will repossess. Any tenants in this property will be evicted despite the existence of an AST giving them a specific security of tenure. The only recourse to justice possessed by such an evicted tenant is to sue their ex-landlord for breach of contract.

P.P.

taxibird

09-09-2009, 18:14 PM

what if the mortgage is more than up to date?

can they reposses on grounds of breach of mortgage agreement...even if there is exceptional circumstances?

Paul_f

09-09-2009, 18:58 PM

It's really up to the lender, but I suspect there is more than meets the eye here. If the lender has written to the tenant I suggest you contact them. If not then don't worry too much.

havensRus

09-09-2009, 19:01 PM

taxibird

09-09-2009, 19:01 PM

i am not the tennant, im the landlord, the mortage is more than up to date
( i pay to the nearest hundred of whatever is due, which changes quite often this past year due to mortgage interst rates being lowered on near enough monthly basis)

had to move 200 miles away from house due to medical problems with father, and now myself, wasnt able to sell house due to market, would have lost too much anway to sell it.

taxibird

09-09-2009, 19:03 PM

repossession is a step that Lenders take if you fail to keep up the mortgage payments on the property, and fall into severe arrears. Keep up the payments and they'll stay out of your business.
the worst they can do about the lack of permission to rent is to increase the interest rate on the mortgage by 1-2%.

mortgage is up to date, but they say they can repossess as they refused me permission to rent last year, so am doing it without their permission ( had no choice really) but because i did ask orginally they seem determined

Paul_f

09-09-2009, 19:58 PM

I don't think you've said why they refused you permission to let last year which might be relevant.

taxibird

09-09-2009, 20:03 PM

I don't think you've said why they refused you permission to let.

they said if i had wanted to rent property out, i should have got buy to let mortgage, however it wasn't my initial plan to rent out, my plan was to live in my home, illness at home in wales forced me to move home..

Paul_f

09-09-2009, 20:08 PM

Could you convert to a buy-to-let mortgage with the same lender? If not it might be worth approaching an alternative source.

taxibird

09-09-2009, 20:12 PM

Could you convert to a buy-to-let mortgage with the same lender? If not it might be worth approaching an alternative source.

thats maybe an alternative, what what i need to kow is CAN they repossess for renting house without permission? is it set in stone, or does the judge decide, can a judge override the lenders wishes?

Paul_f

09-09-2009, 20:21 PM

You are probably in breach of your mortgage deed (read it, you will have had a copy), so your lender can reposses and you will probably be landed with their court costs too! Talk to them nicely and grovel if necessary.

Paragon

10-09-2009, 22:34 PM

Technically, the lenders aren't interested in what the mortgage is called, they really just want the extra interest that is normally payable on a business loan. In other words, they want a piece of the action. This is exactly what I was told many years ago by a representative of Barclay's Bank in the West End before the commercial loan became called a "Buy to Let" loan. You probably can negotiate a settlement with them.. that is, as long as you have been a good client in the past.

marcustandy

14-09-2009, 20:46 PM

Hi,

I have two properties rented out;

1st) on Buy to let mortgage with BM Midshires
2nd) on consent to let mortgage with HSBC ('consent' as previously my own home) Low interest rate%!!

I want another mortgage to buy a new home for myself, but HSBC (my bank) says while I have a mortgage on consent to let they won't lend me any more...

What are my options? Are there any other options?

a) buy my own home with a BTL mortgage
b) convert the consent to let to BTL (and pay much more!!)

Help appreciated. M.

Templar Mortgage Services

15-09-2009, 07:41 AM

Hi Marcus you dont need to take a buy to let mortgage as these stipulate the property must be let on an ast. You simply need a mortgage lender that will treat the HSBC deal as a self funded buy to let and then allow you a normal residential mortgage at prime rates.

Regards Ryan

rennuz

17-09-2009, 07:19 AM

Marcus,

As long as you have the deposit for a new mortgage you are likely to be OK with most of the major lenders such as Abbey, Halifax etc. You will have to jump through a few hoops i.e. proving you do not have to fund the other mortgages out of your own pocket but thats likely to be it. Probably best to speak to a mortgage adviser who will be able to do the deal for you.

Matt

Kilgore

30-09-2009, 12:57 PM

What are the steps I should take to smooth the process of adding a 'consent to let' option to an existing mortgage?
I appreciate that I will need to speak with my mortgage provider, but just wanted to familiarise my self with the terminology and gain from the experience of others.
I plan to be shortly vacating my property and renting it out to a new tenant.

Thanks for any advice given.

Kilgore

01-10-2009, 13:04 PM

I had some time to do a bit of digging & found this great thread on the subject I asked about.

http://www.landlordzone.co.uk/forums/showthread.php?t=1499

There are some really informative & usefull posts on the subject in here!

t.landlady

30-12-2009, 12:39 PM

I am wondering if i am able to rent my own property out:confused: Do I need a permissin or not? Bit confuesed here

Does anyone experience the same problem If i do what the proceed is

What to do if bank reject it

Many Thanks in Advance

T.

jeffrey

30-12-2009, 13:11 PM

You're confused; we're even more so. Please answer these preliminary points.
1. Do you own the property?
2. Are you a sole owner or a joint owner?
3. Is that ownership freehold or leasehold?
4. Is it a house, flat, or something else [what?]
5. Is it in mortgage?

t.landlady

30-12-2009, 14:06 PM

Sorry should be more specific

Yes I am one of the owner of the properly, which is lease hold -remaining 116 y Got joint residential mortgage with my partner

It’s a ground floor flat (maisonette)

Yes – with residential mortgage not buy to let am afraid

Need to move in bigger property due to family expand As we are not able to sell it and make any kind of profit i decided to rented out ...but have no permission from our bank to do so

I have recently heard about it so am really worried.

Tenants have already moved into the property

Any advices are welcome
Many Thanks

jeffrey

30-12-2009, 14:48 PM

1. You alone cannot let; only the joint owners can.

2. Also, you should certainly not have let the property until you know whether doing so breaches:
a. the long lease's covenants; or
b. the mortgage covenants.

3. You therefore need (URGENTLY):
a. to read the lease (and, if necessary, ask F for consent); and
b. to ask your mortgagee (M) for consent, unless the mortgage is a BTL scheme under which M's consent is not required.

t.landlady

30-12-2009, 15:10 PM

Thanks for your advice Much appreciated!

What would be happened if I don’t ask for consent as the mortgage will cover more than 100% MORGAGE COST

And If I ask now the mortgage lender I think it takes up to 1 y to get a respond back

Many Thanks
T.

jeffrey

30-12-2009, 15:42 PM

What would be happened if I don’t ask for consent as the mortgage will cover more than 100% MORGAGE COST

And If I ask now the mortgage lender I think it takes up to 1 y to get a respond back
Sadly, you risk having M treating you as in default; it might even repossess for breach of your mortgage covenants.
Look: why not contact M, explain your innocent error, plead ignorance, and ask it to consent retroactively? That way, and no matter how long M takes to deal with it, you can show that you took the right action once aware of the error (which will stand to your credit if M and you end up in Court).

t.landlady

31-12-2009, 09:18 AM

Thanks J
I am worried
if M want me to transfer it to BLM which I can not afford – M requires 25% deposit
I thought they will repossess when you are unable to cover your M cost
Agency even did not ask if we have covenant from M
Can M find that properly is rented as money are going into the a/c on regular base and M is paid on time?
What shall I do

Thank you
T.

GillsMan

31-12-2009, 09:58 AM

When I asked my provider (C&G) for permission to rent my property out which was purchased on a residential mortgage, it took about 2-3 weeks to get written permission back and there were a few clauses I had to abide by:

I can't rent it out for more than 5 years; I had to pay a fee which I can't remember how much it was but it was £300-400 if I recall correctly and a few other standard clauses about not letting the flat out to ne'er-do-wells, etc.

Jeffrey is right - you absolutely must tell your mortage company and ask for retrospective permission (they're unlikely to say no if you agree to their terms, pay the fee and have had no problems paying your mortgage in the past).

If you have any sort of insurance on your home, such as contents, building or landlord insurance, it's bound to be invalidated by you renting it without the mortgage provider's permission.

Numpty

15-01-2010, 13:09 PM

I am currently renting a property but have not informed the mortgage provider. What is the worst that can happen if they find out ?

cfaproperty

15-01-2010, 13:18 PM

If you were required to advise them as part of the mortgage conditions (probably in the small print) and you haven't you are in breach and they could effectively get you out or compel you to sell it to redeem them.

As more and more of the deals done in the "better times" are being looked at by these lenders they could find out. Always worth coming clean, you may have to pay a slightly higher rate but bear in mind if it is now a legitimate B2L loan the interest will be tax deductable.

It is a bit like not advising your insurers of any changes to your circumstances that could affect their assessment of risk, any claims are likely to be disallowed and at worst they could go after you for fraud.

Your choice.

mickythehammer

09-07-2010, 10:46 AM

--------------------------------------------------------------------------------

Hi guys I have a quick question

I have a residential mortgage and soon after purchase of my house (6 months ago) decided to let the property for a period 12 months (decided to move back home for a year and save some money to build an extension).

At the time I was not aware I had to apply for a Consent to Let with the bank (HSBC).

As I understand, HSBC normally allow those with residential mortgages a consent to let for a 12 month period and so had I known this was necessary and informed them immediately, there would have been no problen. Do you think that when I now contact the bank to obtain the consent to let they will have any issue with the fact it has already been let for a 6 month period without their knowledge? What if any action might they take?

Thanks in advance for your help

Michael

cfaproperty

09-07-2010, 10:54 AM

They could arguably pursue you for breach of the original mortgage terms, but I presume your mail (from them) has been going to that old address, change that, without them knowing the real reason, will catch you out, why not just ask for it now.

If they refuse, then you might have an issue, if they accept and ask you for a copy of the tenancy agreement you will need to make them aware that you overlooked it before.

mickythehammer

09-07-2010, 11:03 AM

cfaproperty

09-07-2010, 17:41 PM

I plan to contact them and sort it out. When I do, should I tell them it has already been let for 6 months or avoid this unless asked? What is the likely action the will take should they establish it has already been let for this period?

Don't know the answer to that, but if they ask you a specific question " have you let it yet?" just be honest with them. If they find out they may charge you a higher rate since the commencement of the AST or give you a verbal rap over the knuckles, I would suspect they wouldn't take it any further but you will now be firmly on their radar.

The worst case scenario is they have your property back as you are in breach of the contracted terms, but very unlikely, especially if the loan is performing.

Tabskitten

30-07-2010, 13:48 PM

i am letting a flat that i bought to live in , then a year later moved county so decided to let it out, i have just read up that i should have changed mortgage agreement, is this true and if so what are implications and should i do it nowW
thank you for any help
tabs

jeffrey

30-07-2010, 14:01 PM

Your mortgage conditions will state whether or not you need consent from the mortgagee (lender) to sub-let.
If you need it, ask for it. Changing the mortgage is not necessary; consent might well be.

Interlaken

30-07-2010, 14:02 PM

You should ahve told your lender or should do it now that you are letting and see what they come back with. Most are quite helpful. I hope you have taken out the correct insurance on the building as they will certainly require you to do that. Letting increases the risk.

jeffrey

30-07-2010, 14:04 PM

Tabskitten: also read your long lease. This might restrict or prohibit subletting.

Tabskitten

30-07-2010, 14:18 PM

lease is fine i know that so that s one thing ok at least!!
i just cannot find anything so far on my BM mortgages contract mentioning letting so will keep looking and call them by end of day if i cant find out from paperwork

now the insurance issue- er no!! we are getting it pronto through had a quote for a few but if there are any good insureance for LL cos that you can advise?!

Interlaken

30-07-2010, 14:31 PM

There are loads of landlord insurers online take a look.

jeffrey

30-07-2010, 14:36 PM

now the insurance issue- er no!! we are getting it pronto through had a quote for a few but if there are any good insureance for LL cos that you can advise?!
What insurance issue?

Tabskitten

30-07-2010, 15:00 PM

this is a bit of a nightmare.
Have poned BM and requested to change to buy to let BUT if i do that before Jan next year we get a £4000 fine for changing mortgage early!!

now not sure how to get around this or what to do!

jeffrey

30-07-2010, 15:04 PM

But why did you let without consent and how is that BM's fault?

Tabskitten

30-07-2010, 15:15 PM

I never said it was their fault?!
I did not realise that i needed consent in order to let. If I had known then i would have.:(

GJMSurrey

30-07-2010, 20:53 PM

Firstly, Landlords insurance is relatively low cost. There are many companies out there (I use Hamilton Fraser). It will cover contents and a few other liability aspects.

It's disappointing but not surprising in my opinon that a new landlord like yourself would miss the fact that you will require a new mortage if you let the property. Very unfortunate.

The situation is a difficult one: your current mortgage will not allow you to let and if you remortage you incur an early redemption charge. To top it all, should you pay the redemption figure, your next mortage will likely be at a higher buy to let rate.

I cannot think if a good way out.

If you had officially remained at the property and had a 'lodger' this might have been okay under the mortage terms, and then you could go all out with a tenancy agreement after January. Or if you had noticed this error later.

I would speak to the bank and explain the error - particularly if there is nothing on the contract restricting you sub letting? - and ask for some dispensation to allow you to hold on until January. If they do this you could remortgage with them, but if they force you to change now then your would remortgage elsewhere and pay back the penalty I guess. This could all be futile but I can think of nothing else.

If you remortage I understand the redemption fees and new arrangement fees would be tax deducable against your letting income, so you would save the 25% or 40% for higher earners tax should you be making a profit.

cfaproperty

31-07-2010, 11:17 AM

If you remortage I understand the redemption fees and new arrangement fees would be tax deducable against your letting income, so you would save the 25% or 40% for higher earners tax should you be making a profit.

I think this is still a grey area http://www.taxinsider.co.uk/326-Early_Redemption_Penalties_on_Loans.html#options

JAY1066

10-08-2010, 23:32 PM

Please advise.

I've just started renting my house out (tenant in from 13/8).
Against my better judgement I took the advice of a friend who rents property and contacted my mortgage provide to advise them.
I thought that they would charge an admin fee of approx £50, as I've had the mortgage for 22 years and only owe £8k.
I should have realised that they'd want to take my money under false pretences by transferring me to a new product which triples my monthly payments with a 5.49% interest rate and charge me a £1,000 arrangement fee! I asked them to explain why I needed to change mortgage as I will still pay it and have the insurance sorted out.
Currently I'm paying the interest only £15 a month at 1.5% above BBR and this tracks the BBR.
I was told that if I rent the property out, to not take this product will put me in breach of my mortgage terms.

WHat are my options?
1) Can I ignore them (as the landlords insurance didn't ask whether I had permission from the mortgage provider), or can they take money out of my accounts as a fine?
2) Pay the £8k now and end the mortgage
3) Find another repayment mortgage?
Ok, I probably won't get as good a rate but I want to avoid an arrangement fee.

Thanks

theartfullodger

11-08-2010, 07:40 AM

You've learnt a lesson - check first next time !!!

Pay the £8k off, then think about getting a more sensibly sized B2L mortgage on the place...actually ask your lender 1st if he'd give you a bigger B2L mortgage on good terms as you're such a loyal customer...

You'll know that any interest on such a loan may be allowable against rental income to reduce your tax bill.... [Err.. can't recall rules on if a mortgage qualifies for tax relief or not- anyone else?? ] (you have told tax man ?? If you don't, chances are someone else will, and tax man may then be very suspicious of you ...)

And you've got Gas safety cert?? & Deposit is protected??

Cheers & welcome to the fun world of property lettings...

Lodger

mind the gap

11-08-2010, 08:24 AM

You'll know that any interest on such a loan may be allowable against rental income to reduce your tax bill.... [Err.. can't recall rules on if a mortgage qualifies for tax relief or not- anyone else?? ] (you have told tax man ?? If you don't, chances are someone else will, and tax man may then be very suspicious of you ...)

Yes, interest payments on mortgages for rental properties attract tax relief, but not capital repayments.

Ericthelobster

11-08-2010, 08:56 AM

I was told that if I rent the property out, to not take this product will put me in breach of my mortgage terms.That is pretty common: rates of interest for BTL mortgages are higher than for residential ones as the lender is taking a bigger risk - simple as that. I pay a significantly higher interest rate on my BTLs than on my own home; just because you've held this mortgage for some time doesn't change that simple general fact.

1) Can I ignore them (as the landlords insurance didn't ask whether I had permission from the mortgage provider), or can they take money out of my accounts as a fine?You'd be in breach of your mortgage T&Cs if you did... not sure what the sanctions for this would likely to be in practice, but I suppose ultimately they cold repossess?

2) Pay the £8k now and end the mortgageProbably the most cost-effective option open to you, if you have the cash

3) Find another repayment mortgage?Certainly a possibility - you might be able to use the threat as leverage with your current lender to get a better rate (but unlikely). However, there will certainly be start-up fees of some sort, eg you'll need a valuation doing and probably there'll be an arrangement fee too (almost definitely if you go for a eg a fixed-rate product). Personally I'm currently on the standard variable rate with my domestic mortgage after the end of the fixed period, and have a relatively small mortgage: I've looked around but can't find any better deals once I've taken into account the start-up costs, so I'm sticking with what I've got.

JAY1066

11-08-2010, 20:34 PM

Will do!
I've got gas safety, electrical periodic, PAT & landlords insurance and I have a letting agency who have arranged the deposit side and will take the money.
To maximise tax relief I will have to swop mortgages from my partners property, but wanted to see what renting out was like for the first 6 months!

You've learnt a lesson - check first next time !!!

Pay the £8k off, then think about getting a more sensibly sized B2L mortgage on the place...actually ask your lender 1st if he'd give you a bigger B2L mortgage on good terms as you're such a loyal customer...

You'll know that any interest on such a loan may be allowable against rental income to reduce your tax bill.... [Err.. can't recall rules on if a mortgage qualifies for tax relief or not- anyone else?? ] (you have told tax man ?? If you don't, chances are someone else will, and tax man may then be very suspicious of you ...)

And you've got Gas safety cert?? & Deposit is protected??

Cheers & welcome to the fun world of property lettings...

Lodger

Ericthelobster

12-08-2010, 17:43 PM

To maximise tax relief I will have to swop mortgages from my partners propertyCould you explain exactly what that process will involve? Sounds to me as if there is a very good chance that what you're proposing won't satisfy HMRC, so especially if it's going to cost you money to 'swop' them, this warrants investigation.

theonlymonkfish

27-08-2010, 10:51 AM

what do you think?

I spoke with my mortgage company this morning about potentially letting out my home for a couple of years.
I was told I needed to change my contract to a 'buy to let mortgage' or I would breach the residential contract I currently have, she also told me I would have to make a capital payment for this to even be an option as they only lend out 75% of the value of the house. £43,277!!! is the amount I would need to pay to change over.

What are the implications of not changing the mortgage and leaving it a it is but still renting it out? does this vary widely depending on the company you are with? any useful suggestions?

Mrs Mug

27-08-2010, 11:09 AM

What are the implications of not changing the mortgage and leaving it a it is but still renting it out?

Your mortgage company could reposses your property, because you have broken the terms of your mortgage contract.

jeffrey

27-08-2010, 11:16 AM

theonlymonkfish: Mrs_Mug is right. Read the rest of this long thread re why!

AndyJohnson

24-01-2011, 17:56 PM

hi all

i have a residential mortgage and i've just rented it out to tenants

i havent informed my mortgage co. yet

1. what would happen when i do inform them? will they move me on to another mortgage? will it cost me more?

2. what happens if i dont inform them and they find out? would i receive a fine or a slap on the wrist?

3. what other consequence are there of me not informing them? ie. insurances issues?

thanks for your help...

theartfullodger

24-01-2011, 19:52 PM

Your lender is quite likely subscribed to Mssrs Experian and their "Mover Alert" offering...

http://www.experian.co.uk/consumer-information/mover-alerts-information.html

Identification of undisclosed Buy-to-Let risk

When a customer lets out their home without advising their mortgage lender, it means the debt is incorrectly priced and risk is increased. Getting early notification of properties to rent with Mover Alerts allows the lender to be proactive in protecting its position.

My mum said I should always try & tell the truth...

Think you'd get a better deal if you told them rather than when they find out you didn't bother to tell 'em...

AndyJohnson

24-01-2011, 20:03 PM

thanks for the reply

not sure how they will find out if i let it privately

so let's assume i'm a naughty boy and dont tell them

what can happen?

ps: your mum is right by the way - however, by choosing to remain silent, i'm neither lieing nor saying the truth

theartfullodger

24-01-2011, 20:14 PM

not sure how they will find out if i let it privately

Sigh!! Experian is one of the biggest credit reference agencies in UK. So, when your new tenants apply for any sort of credit account (or move an account) - mobile 'phone, land-line, credit card, some utility deals, loans, catalogues, etc etc etc etc.. as well as go on't electoral, register (publicly) they'll know...

jta

24-01-2011, 20:15 PM

try &

Why the qualifier in the sentence? What circumstances do you not 'tell the truth'. Where do you draw the line?

theartfullodger

24-01-2011, 20:18 PM

Why the qualifier in the sentence? What circumstances do you not 'tell the truth'. Where do you draw the line?

I take my guidance from St Augustine of Hippo on this matter and his taxonomy of lies (8 of them!)...
http://en.wikipedia.org/wiki/Lie#Augustine.27s_taxonomy_of_lies

My mother qualified the remark as she knew what sort of a wicked little boy I was....

Mrs Mug

24-01-2011, 20:28 PM

so let's assume i'm a naughty boy and dont tell them

what can happen?

They could repossess your house, because you've breached your mortgage contract.

LesleyAnne

24-01-2011, 20:55 PM

You may also find your house insurance is void.

AndyJohnson

24-01-2011, 21:10 PM

repossess my house!?

thats a bit drastic isnt it!?

i'm sure this goes on often when people move out and rent their properties and 'forget' to let their mortgage co. know

so if they move you on to another buy to let mortgage - is a fixed fee payable to get onto this new mortgage?

cheers

Mrs Mug

24-01-2011, 21:24 PM

so if they move you on to another buy to let mortgage - is a fixed fee payable to get onto this new mortgage?

It all depends on which mortgage company you are with, they all have different rules.

Some just want to be informed, some will charge a fee for consent, some will move you to a buy to let mortgage and some will put your interest rate up.

You will have to find out what your mortgage lender will do.

LesleyAnne

24-01-2011, 22:27 PM

mariner

24-01-2011, 23:03 PM

More info please.
You mentioned in passing 'so if they move you on to another buy to let mortgage..'

Advice above assumes you bought the house with a standard owner/occupier mort. and then moved out to move tenants in.
Or did you buy with a Buy to Let mortgage which naturally assumes you are going to Let it and oft applies a higher repayment rate?

property mongrel

24-01-2011, 23:11 PM

I'm sure I read something about being able to offset interest on BTL mortgage payments against the rental income you receive from letting that property for tax purposes. You would not be able to do this with a residential mortgage, or at least you could try until HMRC found out!

Maybe someone here with more knowledge of this could confirm whether I am right here?

If so, you may find that changing to a BTL will make everything "legal" and you still wouldn't be much worse off.

HMRC are concerned with income and costs. The "type" of mortgage is irrelevant. It is what the loan is used for that matters.

The lender is concerned with maximising profit business and from selling the appropriate product with a suitable high interest rate. The type of mortgage matters more than the purpose for which the loan is used.

pm

LesleyAnne

24-01-2011, 23:38 PM

HMRC are concerned with income and costs. The "type" of mortgage is irrelevant. It is what the loan is used for that matters.

pm

Thank you, I stand correct!

boletus

25-01-2011, 00:04 AM

hi all

i have a residential mortgage and i've just rented it out to tenants

i havent informed my mortgage co. yet

1. what would happen when i do inform them? will they move me on to another mortgage? will it cost me more?

It is, of course, possible that your mortgage co may refuse to give permission to let. Particularly in the current lending climate.

MarkN

08-02-2011, 15:15 PM

I need to sell but cannot, but I have to move out. I have someone willing to rent and then eventually buy my home, but lender refuses to allow me to rent and there is no equity to enable me to change to BTL mortgage. I have 2 months arrears but I have agreed a repayment scheme with the lender.
I do not know what to do. I cannot afford to just pay the mortgage until we eventually sell. Can anyone offer any advice to get the lender to give approval. Lender is Redstone who have been fined recently by FSA for poor customer service
Thanks

theartfullodger

08-02-2011, 15:43 PM

When you say "need to sell but cannot" do you mean you would be in debt if you sold at the price you could get now?? If so (apologies) given you are already in arrears have you considered bankruptcy??

Lender does not have to give permission to let.

MarkN

08-02-2011, 16:08 PM

By need to sell, I mean I need to sell so I can move on rather than for financial reasons. I should have said want to sell, but in current climate it is taking forever. I have sorted out the arrears, so would prefer not to be evicted or declare bankrupcy because of subsequent credit problems.
It seems so unfair that I have a solution which will meet the requirements of the mortgage and allow me to get on with my life, but for the Bl**dy mindedness of the lender

LesleyAnne

08-02-2011, 16:22 PM

Sorry to hear of your situation. However, there is little you can do as your lender has a vested interest in your property and therefore can choose not to permit letting. They may have offered you a preferential rate until now, which is why they want to hike up the price if you declare you are letting. Can you not change to another lender who is offering BTL on better terms?

Otherwise, is your house not selling due to the price? I know you probably want to cover your investment in the place to move on and start afresh, but it may be worth reducing the price to secure a sale and cut your losses, rather than continue to pay mortgage you cannot afford on a house you cannot sell.

Sorry, there is no way around it as far as I can see. Lender holds the purse strings so they dictate the rules.

jeffrey

08-02-2011, 16:38 PM

[T]here is no way around it as far as I can see. Lender holds the purse strings so they dictate the rules.
True, and of course OP as mortgagor did agree to them when borrowing; the rules have not changed, I assume.

DrunkenJedi

08-02-2011, 18:26 PM

there is no equity

Then what are you losing if you just walk away and hand over the keys?
Whatever you do to force a selling situation now will result in some penalty or financial implication for you.

I understand you may wish to '"move on" but your personal circumstances are not a matter for the lender.

Moderator1

08-02-2011, 22:47 PM

Several threads on the same topic have been merged here

jeffrey

08-02-2011, 23:21 PM

Then what are you losing if you just walk away and hand over the keys?
Despite folklore, "handing over the keys" [to mortgagee]:
a. changes nothing; and
b. releases no-one from anything.

mark_ctid

21-04-2011, 11:32 AM

Hello

I am looking for a bit of advice.

We received a letter from the landlords mortgage company addressed to the occupier, therefore we opened the letter and it stated that the mortgage was granted on the basis that the property would be occupied by the borrower. As the landlord has moved abroad they are breaching the terms of the mortgage, therefore the building society can start proceedings for possession of the property. The letter then states that we could be evicted as an unauthorised occupier.

1. Could we be evicted?
2. How long would the process take?
3. Does the landlord / agent need to keep us informed? The building society would not talk to us.
4. Does this mean the landlord is breaking the 'quiet enjoyment of the property' clause in the AST?

We have been living in the property for 2 and a half years and the letting agent sends out a fixed 1 year term contract each year. The last one was issued in December 2010 - however we overlooked it at the time and did not sign it; the agent has not chased this up since. Therefore the last signed tenancy agreement was for Dec09-Dec10.

In an ideal world, we would like to continue to live at the property but as we have a dog(the landlord knows and is happy with this) it may take a while to find a suitable property that allows pets.

Would anything above mean we could give 1 or 2 months notice and leave before December 2011? We do not want to be in the situation where we would have to leave within 14 days.

Thanks

thesaint

21-04-2011, 14:45 PM

1. Could we be evicted?
2. How long would the process take?
3. Does the landlord / agent need to keep us informed? The building society would not talk to us.
4. Does this mean the landlord is breaking the 'quiet enjoyment of the property' clause in the AST?

1. Possession Order
2. Months
3. Not really.
4. Yes/No/Maybe. Why?

Lawcruncher

21-04-2011, 15:22 PM

Assuming that:

(a) the mortgage was made before your tenancy started

(b) the mortgage requires the building society's consent to let and

(c) such consent was not obtained

then,

(d) the letting does not bind the building society until it does something to confirm it, but

(e) as between you and the landlord the letting is binding.

There is no question of the landlord being in breach of the covenant for quiet enjoyment. If you were on a fixed term and the building society obtained possession before it expired you would have a claim against the landlord for damages for breach of contract. Since you are now on a periodic tenancy there may be a theoretical right to damages, but they are likely to be nominal since in practice your position is not a lot less secure than it would be if there were no mortgage. Accordingly I think you should just carry on as you would have done had you not received the letter and await events.

westminster

21-04-2011, 16:15 PM

You can be evicted, but it's not a fast procedure - usually months from start to finish.

There is a recently introduced law, whereby "the mortgagee [must give] notice at the time they apply for a Warrant of Execution to instruct the County Court bailiff to enforce a possession order. When doing so they must also send a notice to the property by first class post or by hand delivery or personal service addressed either to the tenant in their own name or to “The Tenant or Occupier”. The form of this notice is set out in detail and it specifies all the details of the Court who will be dealing with the matter and the details of the mortgagee who is seeking possession. It also spells out the tenant’s new rights under the Act to ask for a stay of 2 months in the execution of the warrant and the process by which this is to be done." (From this link (http://blog.painsmith.co.uk/2010/07/22/mortgage-protection-notice-requirements-set-out/))

In a nutshell, [if and] when the mortgage company obtains a possession order, before they enforce it (by sending in the bailiff) you will receive a notice and you can apply to the court to delay the eviction for two months.

Would anything above mean we could give 1 or 2 months notice and leave before December 2011? Your AST is now periodic, which means you can give LL notice to quit at any time - your notice must be at least one month and also expire at the end of a tenancy period. (The periods begin the day after the last contract expired, and their length is based on the frequency with which rent is payable - e.g. if the last day was 31st December and you pay monthly, then the periods would run 1st - last day of the month, and you notice would have to be served sometime before the 1st of the month and expire on the last day of the month).

FinalCountdown

11-05-2011, 11:36 AM

Ericthelobster

11-05-2011, 12:04 PM

consent to let has not been obtained & income not declared to HMRC.
if the bank receive information that the property has been let out, will the bank act on it? how can they prove owner is no longer occupying if post is being passed on?Probably most likely when you fall out with your friend and he dobs you in to HMRC and the mortgage lender. Of those, the former is much the more serious, and I won't lose any sleep over it when it happens (you might want to read some old cautionary threads on this forum about why letting to a friend is a Bad Idea).

FinalCountdown

11-05-2011, 12:15 PM

Probably most likely when you fall out with your friend and he dobs you in to HMRC and the mortgage lender. Of those, the former is much the more serious, and I won't lose any sleep over it when it happens (you might want to read some old cautionary threads on this forum about why letting to a friend is a Bad Idea).

i'm not the owner, honest, & i'm actually with you on this one Eric! i know the person who's renting & am a bit annoyed that they seem to think they're so clever 'getting away' with this...

GillsMan

12-05-2011, 06:48 AM

i'm not the owner, honest, & i'm actually with you on this one Eric! i know the person who's renting & am a bit annoyed that they seem to think they're so clever 'getting away' with this...

I would have thought that with deposits having to be registered in a government approved scheme, it would be fairly easy for HMRC to see who should be paying tax on property income and who shouldn't. Whether HMRC have the wherewithall to act on this is another matter however...

Mars Mug

12-05-2011, 06:54 AM

That would involve computers from different departments sharing information and collating data to produce meaningful reports, I’ve not seen a Government/Civil Service organisation with that capability yet.

theartfullodger

12-05-2011, 07:25 AM

scenario - new build property built in the last 3 years, purchased with 100% mortgage, highly likely now in negative equity. owner has rented out to a friend who will pass on any post received at the property, consent to let has not been obtained & income not declared to HMRC.
if the bank receive information that the property has been let out, will the bank act on it? how can they prove owner is no longer occupying if post is being passed on?

Those nice guys at Experian have a product/service, "Mover Alert"
http://www.experian.co.uk/consumer-information/mover-alerts-information.html
that helpfully flags to lenders this sort of situation anyway, which will trigger even if post is being redirected . It ain't difficult to work out what's going on: However if & when the lender does something depends on many things, not least what other priorities they have.

As someone, like the vast majority, who pays his taxes, I sincerely hope anyone, someone, grasses this tax-cheat up to HMRC. We don't want crooks in our country!

Also suspect it "highly likely" landlord ain't bothered with a few other items (I could of course be wrong): Gas safety certificate(!!), correct insurance (try claiming when house burns down & tenant 'orribly burned.., etc etc etc etc...).

Mars Mug

12-05-2011, 08:15 AM

Also suspect it "highly likely" landlord ain't bothered with a few other items (I could of course be wrong): Gas safety certificate(!!), correct insurance (try claiming when house burns down & tenant 'orribly burned.., etc etc etc etc...).

And the next door neighbour's insurance getting involved due to damage to their property, can get very nasty very quickly.

FinalCountdown

12-05-2011, 09:55 AM

i don't think a deposit was paid, even if it was, it definitely won't have been put in any deposit scheme.

post isn't being re-directed, it's just passed on whenever the owner sees his friend.

i know that none of the requirements for a landlord have been done, gas certificate etc - "it's a new house mate, nothing will go wrong!" type of thing was said.

i don't know about insurance, i did say that even if there is insurance paid for, i doubt it would pay out as nothing has been declared/set up properly.

this has been going on for over 6 months now & i said to my friend (the occupier) a couple of times early on that this wasn't being done correctly. even if he's getting a good deal on the rent, it could get messy very quickly, but i don't think either of them are taking it very seriously as nothing has gone wrong - yet!

from an outsider's view, why should they get away with it? but then it's nothing to do with me so why should i stick my nose in either??