Permission to Let Northern Rock.

Brazilio1975

Here's pickle for you.

My Girlfriend has recentlly moved into my flat - leaving her flat un-occupied. Given the state of the housing market we have decided to rent her flat - we have done it up, and put it to let through an agent following the many, many procedures recquired from us in doing this.

The only proble is that Northern Rock have now rejected her application to alter her Mortgage allowing her to Let the flat... She cannot get out of this Mortgage arrangement until January, we have a £4k early repayment if we sell before Jan. We have no thoughts of not paying the Mortgage during this period.

Meaning we are kind of snookered.

Options seem to be...

A. Just go ahead and Let it anyway... and face the penalties as they arise. We will keep up payments on the Mortgage and I am sure that is more than they are receiving from some people.

B. Sell - but that could take anything up to and over 6 months given the state of the Market.

C. Just leave the flat lieing there and wait until the market picks up - meaning a substantial drain on finances over the next while.

Not a fantastic set of options but surely this is a common scenario and if anything by letting we are better able to pay this mortgage.

Jacka87

Can you not live in her flat and let yours? If so will your mortgage provider allow the change in use?

If you let it and Northern Rock find out then what does that actually mean will happen? You might need to find out what the penalty is?

If the rent between now and January covers the £4k fee you could move mortgage and rent out though thats probably not likely.

Final option is speaking to Northern Rock and see if they will change their mind.

Brazilio1975

Thanks for your response.

Not really an option, as her flat is a lot smaller so ideally we eant to be in mine. Agreed that we need to know what the penalty is - so if anyone knows ...

Stumped.

silvercar

What penalty? For letting without consent?

(apart from the slating you will get on here;))

If the lender finds out, they will most likely charge you the fee for consent to let (£200? plus possibly a slight increase in your mortgage). They could, in theory, demand repayment of the mortgage, but I've not heard of that happening where you keep up with repayments. They would need to take you to court and demand repossession for breach of contract. I have never heard of anyone having had that happen to them when they have kept up with repayments.

You do need to have the correct building insurance (that allows tenants) and comply with all other landlord laws including gas certificates, tenant deposit schemes, declaring the income to inland revenue etc.

The only other penalty I can think of is if you fell behind with repayments and the lender repossessed. The the tenant could sue you for breaching the AST as the tenant would be turfed out, potentially with little notice, as the lender hasn't acknowledged the tenancy.

Brazilio1975

Thanks - this is kind of my opinion on the matter - and I am speaking to an IFA who has kind of said almost exactly the same as you.

The key obviously being in that we will keep up repayments.

Realistically we will be hoping to put the flat on the market (to sell) in about a year when there is a bit more sign of activity. And I am guessing it is unlikely that anyone would check up in this period.

I presume this is not a popular move on here - but realistically every other option costs us money.