Renting My Property - What do I Tell Bank?

Gareth78

Hi all,

I will shortly be renting out my property and need to know what, if anything, I need to tell my mortgage provider. I assume that i need to switch to a buy-to-let agreement but will I get into serious trouble if i just go ahead and rent it without telling them?

My mortgage is currently so low that i'm reluctant to switch mortgages for fear of them hiking it up to such an extent that it would be no longer viable for me to go down this route.

Thanks all,

Gareth

staffie1

If your mortgage agreement requires you to tell them...then you tell them it really is that simple.

poppysarah

Many are now just asking for a small fee to get permission to let - *if* it's only going to be for a year.

theartfullodger

Clearly you've already planned to "tell" HMRC so you can pay tax on any profits, and will have told your insurer/got a new specialised Landlord's insurance policy, got the EPC, the Corgi cert. for any gas appliances etc. etc. etc..

The serious trouble would be if you don't tell the lender (or rather more specifically don't get their permission) - as then if they find out they can take possession & sell the property. Not worth the risk.

Cheers! In the long-run, usually, renting out most property usually makes money. Just don't bank on it. And make sure you are emotionally prepared for two things....
a) a 'phone call at 10:35pm Saturday evening, usually when you are 350miles away, advising you of a toilet leak. When you enquire "how long has it been leaking" you get the answer - "not sure, at least 3 weeks though..."
b) The "Tenant from hell" who pays nothing, won't leave and takes you 9-12 months to get out - while you pay legal fees & the mortgage.

If you don't think you can cope with a & b, maybe this ain't the game for you... Just trying to help you be realistic...

Best wishes and hope it goes well..

Artful

staffie1

theartfullodger wrote: »

b) The "Tenant from hell" who pays nothing, won't leave and takes you 9-12 months to get out - while you pay legal fees & the mortgage.

...not to mention the tenant from hell who turns your house into a canabis factory, then sods off one night leaving you to deal with it. Did you see that on TV in the week? What a ******* liberty ! :rotfl:

Pring

Most banks don't require you to switch to a Buy to Let but you will need to switch to something similar called a Consent to Lease mortage (at least, that's my experience with the Halifax).

You'll have to pay a product fee and refix at their new rates and this gives you consent to lease out your property for up to 3 years after which you have to switch to either a proper Buy to Let mortage, move back in or sell.

Gareth78

Thanks for the answers - theartfuldodger - i am using a letting agency in a fully managed capacity so hopefully I won't get any of those phone calls. I will also be living close to the property I am renting so hopefully i can keep a close eye on the comings and goings!!

I've put all the necesary legal requirements in place, its just the mortgage provider I don't really want to tell. Being a "first time" "landlord" and using a letting agent, I assume the agent will tell me all I need to know regarding the mortgage - and if he doesn't, can I plead ignorance?!!

Gareth78

NeilInglis - I am on a 0.9% above BoE BR and paying just 140/month. I doubt i will get one as competitive if i switch, will I?

theartfullodger

I wish you luck with being a landlord & with your agent.

Nope, can't plead ignorance.

Two things worth remembering...
a) The agent is only an agent: You have almost all the legal responsibilities. e.g. the tenancy is between YOU and the tenant... Check if the agent is a member of some suitable body: Don't entirely believe what he tells you - check with the body! (My agent, done a very good job, had 2 stickers, I forget which, in their window "member of,..." Checked with the web-sites - yup, member of one, not on t'other. Once you've established if (and only if)you are being lied to you'll know to be cautious...
b) It's YOUR responsibility to fill in those forms & send them off to HMRC. Agents fees & shed-loads of other things (in particular interest on the mortgage) are allowable as expenses so keep records.. maybe buy a book - Carl Bayley's"How to Avoid Property Tax

" £23:70 fom Amazon. Probably save you more than that when you report 2009-2010..

Cheers! Good luck...

Artful

PS Lodger not Dodger...my dodging days are over...

Gareth78

Thanks theartfuldodger.... very useful information. Looks like i'll have to bite the bullet and tell them. I'm with the halifax and as NeilInglis says they this consent to lease product so lets hope it wont cost me too much more than i was hoping to pay!

theartfullodger

theartfulLODGER