Renting without permission from lender

hopefulfooluk

OK so this is probably going to attract a lot of flaming - apologies if it stirs up some bad feelings amongst people on this board but I just want to know the facts.

I am planning on renting my mortgaged house out in a few months' time as I am moving in with my girlfriend and her 2 children. I've written to my lender (GE Money / igroup) asking consent to let as I want to make sure I'm doing everything properly, and while I wait for a reply from them, was wondering firstly if any of you had been given permission by GE Money to let your houses in the past.

Secondly - if they turn around and say no, what risk would there be to tenants if I did let the property anyway? The mortgage will be paid so no risk of reposession.

Thanks in advance,

Chris

PasturesNew

If your mortgage is paid, not much risk to the tenants.

But if the tenants turn out to be rogues and don't pay the rent or trash the place, then you won't have landlord insurance cover in place probably.

Also, what if it caught fire and somebody died... it'd not be insured probably.

So, if you did do it without telling them, you'd need to cover your 4rse on the insurances front.

theartfullodger

So if you are considering not abiding by the terms you agreed with your lender, GE, what else are you considering ignoring??
-
-Gas Safety Cert??
- Insurance (as a Landlord??): Kinda significant: If property insured as "your home" but actually rented out & the place burns down & various people 'orribly injured - Insurers likely won't pay out...
-Declaring your income to the tax man??
- Not bothering getting an EPC before advertising the place?
- etc etc


btw the lender almost certainly does have the right to repo. in these circumstances, albeit I've not heard of it actually happening, and may well charge you extra fees/income as well...

Cheers!

Lodger

DVardysShadow

If you are refused consider remortgaging. You say there is no risk to the tenants because the mortgage will be paid. So you are good for a remortgaging, right?

hopefulfooluk

theartfullodger wrote: »

So if you are considering not abiding by the terms you agreed with your lender, GE, what else are you considering ignoring??
-
-Gas Safety Cert??
- Insurance (as a Landlord??): Kinda significant: If property insured as "your home" but actually rented out & the place burns down & various people 'orribly injured - Insurers likely won't pay out...
-Declaring your income to the tax man??
- Not bothering getting an EPC before advertising the place?
- etc etc


btw the lender almost certainly does have the right to repo. in these circumstances, albeit I've not heard of it actually happening, and may well charge you extra fees/income as well...

Cheers!

Lodger

I'm not considering ignoring anything, which is why I asked and said I want to do things properly. There's no gas at the property so no gas cert needed, my letting agent is organising an EPC and I'm self employed so the income will go onto my SA.

Wasn't aware of the extra landlord's insurance, so thanks for the pointer in that department too.

Cheers!

silvercar

hopefulfooluk wrote: »

I'm not considering ignoring anything, which is why I asked and said I want to do things properly. There's no gas at the property so no gas cert needed, my letting agent is organising an EPC and I'm self employed so the income will go onto my SA.

Wasn't aware of the extra landlord's insurance, so thanks for the pointer in that department too.

Cheers!

Try directlineforbusiness or alanboswell for landlords' property insurance.

Having made an enquiry to GE, there is the risk that they will write to you at the property to find out if you have let it. You do then risk them increasing the mortgage rate slightly or charging a fee.

Provided you keep up with the mortgage payments, I've never heard of a lender repossessing.

theartfullodger

nationwide (selling LV..) were the cheapest for us recently...

Cheers!

Lodger

franklee

hopefulfooluk wrote: »

Secondly - if they turn around and say no, what risk would there be to tenants if I did let the property anyway? The mortgage will be paid so no risk of reposession.

As we have seen from several threads recently, especially MissMoneypenny's sticky thread, a good agent or a clued up tenant will ask you if you have consent to let. The risk to the tenant is the tenancy isn't binding on your lender, which matters if there is a repossession. Now you say there is no risk of repossession in your case but a tenant in this day and age will still be wanting to ask about consent to let as they aren't privy to your financial status and thus do not know what your repossession risk is. The point is be prepared for being asked by the agent or tenant if you have consent to let, how will you reply?

Also there is the issue of where your mortgage statements are sent. If you ask GE Money to send your statements to a new address won't they twig you've moved? If you leave the post as is and ask the tenant to forward it to you there is the risk of letters going astray and also the tenant noticing your mortgage statements come to them which is a big hint of no consent to let. If disgruntled that the tenancy isn't binding on your lender the tenant may then dob you in, either now or after they leave. I suppose you could use royal mail redirection but I've found the success of that to be intermittent.

Anyway IMO a lack of consent to let doesn't set the landlord/tenant relationship off on a good footing.

Besides if your finances are as sound as you say you will easily get consent to let or a BTL loan elsewhere so no need to cheat. Things like increasing the equity by paying a wad more off the loan can easily help you get consent if you are initially refused.

housebuyer_abc

franklee wrote: »

As we have seen from several threads recently, especially MissMoneypenny's sticky thread, a good agent or a clued up tenant will ask you if you have consent to let. The risk to the tenant is the tenancy isn't binding on your lender, which matters if there is a repossession. Now you say there is no risk of repossession in your case but a tenant in this day and age will still be wanting to ask about consent to let as they aren't privy to your financial status and thus do not know what your repossession risk is. The point is be prepared for being asked by the agent or tenant if you have consent to let, how will you reply?

Also there is the issue of where your mortgage statements are sent. If you ask GE Money to send your statements to a new address won't they twig you've moved? If you leave the post as is and ask the tenant to forward it to you there is the risk of letters going astray and also the tenant noticing your mortgage statements come to them which is a big hint of no consent to let. If disgruntled that the tenancy isn't binding on your lender the tenant may then dob you in, either now or after they leave. I suppose you could use royal mail redirection but I've found the success of that to be intermittent.

Anyway IMO a lack of consent to let doesn't set the landlord/tenant relationship off on a good footing.

Besides if your finances are as sound as you say you will easily get consent to let or a BTL loan elsewhere so no need to cheat. Things like increasing the equity by paying a wad more off the loan can easily help you get consent if you are initially refused.

Also most landlord insurances have a clause in them stating that the charge holders on the property are aware of the intention to enter into a rental agreement.

Your mortgage provider isn't so the insurance wouldn't be valid anyway

hopefulfooluk

Thanks all. Fingers crossed that GE say yes then otherwise I may have to go elsewhere (which I don't want to do).

Cheers!

silvercar

housebuyer_abc wrote: »

Also most landlord insurances have a clause in them stating that the charge holders on the property are aware of the intention to enter into a rental agreement.

Your mortgage provider isn't so the insurance wouldn't be valid anyway

None that I have seen!

The mortgage lenders interest in the property needs to be registered. Normally the insurer will send a copy of the insurance document to the lender. So if a lender sees insurance documents arriving from a name that is obviously a letting insurer alarm bells could ring (assuming joined up thinking by the admin teams).

Claims can only be declined if the insurer wasn't aware of the risks when taking out the policy; so having a policy that doesn't allow for tenants means that you risk any claim being turned away if there is the possibilty of the claim arising, even inpart, by the presence of tenants.

If you have the correct insurance then the insurer would have no grounds for denying a claim if they are aware of tenants.