Consent to Lease turned down

markc69

I purchased a one bed flat in Nottingham back in 2004. I purchased this for 117K with a 10% deposit and a 105K loan.

I lived in the property for 2 years, before having financial difficulties, and then decided to rent it out. I went through all proper channels, used a fully managed property managed service, have told the freeholders, have landlords insurance, and have a good tenant.

This was 2 yrs ago, and have since taken up a good job in Australia. Having to sort out my tax situation, I spoke to my mortgage provider (Halifax) and told them i was renting out my property and wanted to send my correspondence to me in Aus. They then mentioned I have to apply for consent to lease. To cut a long story short, they have declined this, this is despite I have a good job and the property has been let for the past 2 years. More so, i have never missed a mortgage payment.

Does anyone know what my options are now? Since the property is in negative equity, there is no chance of getting a buy to let mortgage. I also do not want to give up my job in Australia, kick out my tenant and have to move back in. I am worried though as I know by the letter of the law, Halifax can start repossession proceedings against me.

Any help would be appreciated

MissMoneypenny

Can you get a loan to pay down the mortgage and then get consent to let?

The tenant will be able to find somewhere else if they have their 2 months notice, but how long is the tenancy contract for?

silvercar

I have not heard of a case where a lender has taken a borrower to court where the landlord has kept up with repayments on their mortgage.

Although you are in breach of a term in your mortgage conditions, the chances of the lender actually repossessing would mean them convincing a judge that a repossession was appropriate.

Write to the lender and tell them you are not in a position to return to the UK, give up your job or evict your tenant.

Chances are they will do nothing. They don't want to give consent as they don't want to have to deal with a tenant if they did and with negative equity they would be facing pursueing you, the other side of the world, for a shortfall. The negative equity is now in your favour as Halifax has little to gain by forcing the issue.

MissMoneypenny

silvercar wrote: »

Chances are they will do nothing. They don't want to give consent as they don't want to have to deal with a tenant if they did and with negative equity they would be facing pursueing you, the other side of the world, for a shortfall. The negative equity is now in your favour as Halifax has little to gain by forcing the issue.

Unless Halifax thinks that house prices will fall further and that it is best to take a small hit now than a bigger hit later. Especially as the landlord is in Oz and will be hard to persue for the loss.

silvercar wrote: »

Write to the lender and tell them you are not in a position to return to the UK, give up your job or evict your tenant.

The OP can give their tenant 2 months notice and then leave the property empty. He would then be complying with the residential mortgage agreement.

franklee

I suppose you could ask the lender what they plan to do if you carry on as you are.

It may be nothing, it may be to start charging you more, possibly fees or higher interest.

Certainly I've hard of cases where a lender has invited the borrower to take their business elsewhere. Wasn't the Halifax though.

Basically in negative equity and relying on rental income you are a worse risk than an owner occupier. This is because you now have to pay out to maintain two households yours and the let in cases of repairs, when the tenant doesn't pay or in gaps between tenants.

silvercar

MissMoneypenny wrote: »

The OP can give their tenant 2 months notice and then leave the property empty. He would then be complying with the residential mortgage agreement.

I disagree, a residential mortgage is given for a property the borrower resides in as their main home, not live the other side of the world.

The only difference between letting the property without consent and leaving it empty is that there is no tenant to answer to if the lender repossesses.

As this is very unlikely to occur, providing the mortgage is paid as contracted, there is little difference between living abroad and keeping the property empty and letting it.

(Except that one gives you an income, meaning you are more able to keep up with the mortgage and one doesn't.)

Check you home building insurance. If you are letting the property you need insurance that allows tenants. If you are leaving the property empty you need insurance that allows this.

Welshwoofs

MissMoneypenny wrote: »

The OP can give their tenant 2 months notice and then leave the property empty. He would then be complying with the residential mortgage agreement.

Hardly the most practical idea in the world that though, is it....

OP, I'd do what franklee suggest, get in contact with Halifax again and see what they intend to do about it. Are there channels to appeal that decision?

Fire_Fox

Does anyone else find it hard to believe that the OP didn't know he had to apply for consent to lease from the mortgage provider yet knew to get landlord's insurance and inform the freeholder?

franklee

Fire_Fox wrote: »

Does anyone else find it hard to believe that the OP didn't know he had to apply for consent to lease from the mortgage provider yet knew to get landlord's insurance and inform the freeholder?

No not in this OP's case, he has the benefit of the doubt IMO.

In other cases, yep, some other posters do write why they don't intend to get consent - they can't afford the extra charges.

housebuyer_abc

Fire_Fox wrote: »

Does anyone else find it hard to believe that the OP didn't know he had to apply for consent to lease from the mortgage provider yet knew to get landlord's insurance and inform the freeholder?

I also think he may need to check the smallprint on his LL insurance, as its usually invalidated if he doesn't have permission to let from the mortgage charge holder

theartfullodger

Indeed:

Albeit it has been pointed out previously that this list of actions is rarely fully explored.....

...
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...LandlordZone)

Cheers!

Lodger