Renting my property in secret

Cinders001

Hi All
This is my first posting so please be patient... I need some advice.
My hubbie and I are hoping to rent our home and move in with friends for 12 months so we can save some pennies to eventually clear off our debt. All the postings I have read have suggested that especially if your mortgage is with a particular provider Ha**f*x that you shouldnt tell them your plans as they stitch you up with mega rates on a buy to let style mortgage.

When you become a landlord you need to change the building and contents insurance and I wondered if the insurance company tells your mortgage lender that there has been a change to a landlord policy.

My sleep is very important to me and I'm worried that if I cheat the system it will come back to bite me. Does anyone have any advice or experiences they would be willing to share with me.

Thanks Cinders

bryanb

You also have to declare you rental income for tax purposes.

Lady_Hamilton

I always thought that in the event of a claim your insurance would become null and void. If you read the terms and conditions of this policy you will probably find a section relating to this.

The house is still 'owned' by the bank - Ha**f*x, and Insurance companies do have a way of getting out of any claims I would have thought the first measure they take is to check if there is a mortgage on the house and if so, is it the correct one for their buy-to-let insurace. It would be a costly mistake if a tennant did put in a public liability claim and you found out later your insurance was null and void!

silvercar

Even if you don't tell the lender you have to declare the rental income to the taxman.

The insurance company will tell the lender that they have taken over providing insurance. This is so that the lender knows you are insuring the building and registering their interest in it. If you take insurance with rental-properties-insurance-limited that would be a big clue! If you use a mainstream insurer you are safer.

What will you do when your tenants get your post from the lender?

silvercar

Lady_Hamilton wrote: »

I always thought that in the event of a claim your insurance would become null and void. If you read the terms and conditions of this policy you will probably find a section relating to this.

The house is still 'owned' by the bank - Ha**f*x, and Insurance companies do have a way of getting out of any claims I would have thought the first measure they take is to check if there is a mortgage on the house and if so, is it the correct one for their buy-to-let insurace. It would be a costly mistake if a tennant did put in a public liability claim and you found out later your insurance was null and void!

You have got this the wrong way round.

You have to tell the insurer that you have tenants. So they know the risk they are covering.

seven-day-weekend

Maybe Halifax will provide you with a Consent to Rent which is much cheaper than a whole new mortgage, especially as you only intend to rent it for twelve months.

I personally wouldn't dream of doing it without telling them. Not only does it invalidate any insurance claim, but if they did find out they could foreclose on your mortgage.

bingibongi

& if the house ceases to be your main residence you may have to pay CGT when you sell it.

princeofpounds

I have been on the wrong side of no consent letting before. The last LL I had did not have consent to let, and was sued by a third party, which led to a repossession attempt by the lender.

It proved to be a real pain because we were evicted, despite theoretically being in the fixed term of an AST your rights get ripped away from you by the lender if there is no consent to let, despite the fact that you are blameless.

In my opinion it's a real hole in the law, which normally tries to defend the security of tenure for a tenant following the contract. But banks come first.

I won't go into the details or the stress, but there was a second dimension to it that was really irritating. Because there was a court case and for various spurious 'data protection' reasons, no-one would tell us what was going on. The LL, the agent, the lender, the court, all were in a conspiracy of silence. If we had paid any money in advance, we would have lost it all.

This was a pain because if the LL had either won the trial or settled to keep the flat then we would still technically have been tied into the contract, even if we had already arranged somewhere else to move to.

I had to play hardball to get agreement to release us on a known date, by making it very clear to the LL that I knew a lot of ways to turn into a 'professional nightmare tenant' if he tried to screw us.

So although in the vast majority of cases letting without consent has proved to have little practical implication, it's actually a very selfish thing to do because it does have critical important implications in the occasional case where a repossession occurs - fixed term tenancies become meaningless junk for the tenant.

Fire_Fox

Could you not just take in a lodger instead? Rent needs declaring but it's tax-free up to about £4K a year.

theartfullodger

My understanding is that if you rent out without the lender's permission the mortgagee (lender) could:
a. sue you;
b. demand damages/compensation;
c. repossess the property;
d. sell the property;

- or a combination of these.

(Source: Another excellent web-site...)

Cheers!

Lodger

PS Small suggestion, a bit radical I realise, but maybe think about it... How's about being honest & upfront about what is going on & tell people the truth??

PPS You'll need EPC, Gas safety cert to rent out & MUST GET LANDLORDS INSURANCE. With ordinary house-holders insurance if the place burns down they probably won't pay out... Your choice what you do, of course...

Jackboy29

I've tried to get clarification on the implications myself but don't seem to have reached a definitive conclusion yet. From my research it's a civil matter between you and the lender. I dont see why landlords insurance would be invalid as this has nothing to do with whether you are having a dispute with your lender or not. You can request a different correspondance address quite legitimately. My lender accused me of letting out my property as i wanted a different correspondance address but as i only planned to live at the property for a few years and my driving licence and all my other bills were at my parents house still i wanted my bank statements to have the same addresss too (i.e. proof of id for credit in shops etc). They accepted this and didn't contact me again.

Also, as stated elsewhere has there ever been a case of a bank repossing a property that was fully up to date on the repayments? I suspect not. If they think you're making money they will want their cut, but in this market things are a little different and ppl are doing what they can to survive. As long as they are getting the repayment i dont think anything too bad will happen. I was advised by a large mortgage broker that it's not even necessary to tell the mortgage company and it's certainly not illegal, merely a civil dispute between you and the lender. I know there are people on here saying it's not fair to tenants as they will get no notice of a repossession and i guess they have a point, but you have to do what's necessary in desperate times to survive. From my experience the fear of being evicted (which isn't very likely to happen anyway) is not as bad as the feeling of not being able to pay you debts.

However, having said that i recently contact halifax regarding consent to let and the guy i spoke to said it's not a big deal and will cost about £400 without any other changes to the rate or deposit etc. So probably worth checkign out, they may have changed their policy recently