BTL or lease without the banks knowlege?

franklee

clutton wrote: »

""If you don't have consent to let, you'll also have problems with insurance.""

not true - i have never been asked to prove that i have consent to let by any insurance company in the 10 years i have been a LL

Does that cover when you've made a substantial claim on the insurance? In my experience insurance companies aren't picky when they collect the premiums, but they are picky when deciding if a large claim is valid or not. You are supposed to declare all material facts to the insurer and I can't see how the OP granting an illegal tenancy wouldn't be a material fact

franklee

As you are going to live abroad you'd need to look at the The Non resident Landlords Scheme if you haven't already done so:

http://www.hmrc.gov.uk/CNR/nr_landlords.htm

Yorkie1

There's also the correspondence address issue - if you don't tell the mortgage company, they'll continue to write to you at the address. Would you be happy relying on tenants to forward mail to India?

Pitlanepiglet

The Insurance issue is only valid if you fail to tell the insurers that the property is now let to tenants. That is not in any way related to telling the lenders.

My own experience was that I bought my flat at the top of the market in 1989 and within 3 years needed to move away from the area to work. I bought for £40k, with a £10k deposit (gotta love those figures!) but having had the flat on the market for 8 or 9 months the best offer I had was £25k. I couldn't sell at that price as I couldn't clear the mortgage and the Halifax at the time wanted to put the mortgage on a commercial basis with a LTV of 75% of the current market value if I told them it was let and I couldn't afford to make up the difference either.

I made the decision to let without consent - I paid the mortgage quite happily, my tenant passed on any post and it all worked fine. After a couple of years I asked the Halifax to correspond with me at a different address and they did that with no issue. I didn't tell the lender until I remortgaged to C&C at a much later date when I was back in positive equity.

It may not be right in the eyes of many people but I had no other options at the time and it worked fine. I did everything else that was required by way of tenant safety, gas cert, declared rental income etc.

OP, the only time it is likely to become an issue is if you can't afford to pay the mortgage....

A lender would have to get a Possession Order before evicting a tenant and I suspect their is little difference for a tenant between whether there is consent or not.

chappers

blckbrd wrote: »

Notice of Change of Occupancy

It is a condition precedent to the liability of the Insurer that the Insured or an authorised representative of the Insured shall notify the Insurer if the Private Dwelling at the Premises specified in the Schedule ceases to be the Insured’s permanent residence, becomes let, or becomes regularly left unattended.Where the property is already let the Insured shall notify the Insurer of any changes in occupancy (to either Students, Professional/Employed Persons, Relatives or those receiving Department of Social Security (D.S.S.) benefits), or if the property becomes regularly left unattended. Upon receipt of this notice the Insurer reserves the right to amend the terms and conditions of this Insurance.

Some insurers do make an issue of it.

That only applies if using your current insurance policy, a purpose built LL/BTL insurance would obviously be for that purpose.

blckbrd

The insurance is a side issue that I was just seeking to clarify - Di Gression is my maiden name

I draw from the OP that the appropriate thing to do is crystal. What's being asked for is 'permission' to do the inappropriate thing based on finances.

We already have a 'just do it' type post - I wonder how many of the opposite flavour it would take to persuade the OP otherwise...

franklee

Alas there are many just do it posts on the forum and also many tenants who find out about their landlord's repossession by chance and then, as the lender will not talk to them, have no way of knowing if and when they will be evicted till the last minute. A tenant in a fixed term cannot just suspect there are arrears and leave as he doesn't know if the arrears will be paid off leaving him bound to pay rent till the end of the fixed term. OTOH if there is consent to let then the tenancy is binding on the landlord's lender and the tenant will be given proper notice. OK this may only be two months notice but that's far better than practically nothing. The most shocking case is one where the landlord re-let the property to a new tenant after the possession order had been granted, see here:

http://landlordlaw.blogspot.com/2008/05/agents-letting-property-subject-to-re.html

Basically a tenant needs to ask for recent proof of consent to let and ideally some evidence the mortgage is paid up to date. A landlord who is in negative equity and cannot afford the fees to get consent to let is at high risk of falling behind with mortgage payments. It may be he has expensive repairs to pay for (like the boiler breaking down), or that he has a long gap between tenants and cannot afford to pay the mortgage during that time. It may be he gets a bad tenant who takes months to evict while not paying rent and then the new good tenant walks into a situation where the mortgage is in arrears.

Some comments from ARLA here:

http://forums.moneysavingexpert.com/showpost.html?p=23720853&postcount=12

nollag2006

I've rented out properties as a landlord, with no problems with insurance. You will need to change your insurance though, as you are no longer an owner occupier.

The insurers have never been concerned about my financing arrangements.

As for the EA - most will not require actual proof that you have permission to lend.

As for correspondence coming to the rented property from the mortgage company - a simple mail redirection to India can be set up on line:
http://www.royalmail.com/portal/rm/product1?catId=400040&mediaId=600008

franklee

Pitlanepiglet wrote: »

I made the decision to let without consent - I paid the mortgage quite happily, my tenant passed on any post and it all worked fine. After a couple of years I asked the Halifax to correspond with me at a different address and they did that with no issue. I didn't tell the lender until I remortgaged to C&C at a much later date when I was back in positive equity.

It may not be right in the eyes of many people but I had no other options at the time and it worked fine. I did everything else that was required by way of tenant safety, gas cert, declared rental income etc.

OP, the only time it is likely to become an issue is if you can't afford to pay the mortgage....

A lender would have to get a Possession Order before evicting a tenant and I suspect their is little difference for a tenant between whether there is consent or not.

It makes a big difference, a first hand example is here:

http://forums.moneysavingexpert.com/showpost.html?p=23676205&postcount=37

Shelter on this here:

http://england.shelter.org.uk/get_advice/repossession/repossession_by_a_landlords_lender

"Since April 2009, lenders are required to send a letter to the property addressed to 'the ocupiers', informing everyone who is living at the property of the date of court hearing. They have to do this within five days of the hearing date being confirmed by the court. You should therefore always open post addressed to 'the occupiers' - do not assume that it is junk mail!

After this, the only notice that you will be given is if the court agrees to give the lender possession. If this happens, the court will send a notice to the landlord and 'any other occupiers', informing them of the date that the bailiffs will be coming to repossess the property. This notice (form N54) may only give a few days' notice of an eviction, so get advice immediately if you receive one."

This is far worse than getting a definite two months notice which a tenant would get if the tenancy was binding on the lender. From that same Shelter link:

"In some circumstances, your tenancy may be binding on the landlord's lender. This means the lender will become your landlord after the repossession and will need a separate court order to evict you. Most tenancies are not binding on the lender, but there are exceptions. You may have a binding tenancy if:
* Your landlord had a buy-to-let mortgage (see above).
* The lender gave permission for the landlord to grant the tenancy.
* You were already living in the property at the time the mortgage was granted (eg as a sitting tenant or when the landlord took out a second mortgage). If you are unsure about when the landlord's mortgage started, ask your landlord, or get advice to find out whether the tenancy is binding. An adviser may be able to confirm this via the court, the lender, and/or by checking the Land Registry.
* The landlord's lender has recognised the tenancy in some way (eg by asking you to pay rent direct to them or by accepting rent from you). Most lenders will avoid doing this or will call the payment something other than 'rent'."

More examples in the sticky thread linked to by FraudBuster above.

chappers

I would always be an advocate for doing the right thing and getting permission and a lot of posts here are in agreement but I wonder if push came to shove and you were in a position of negative equity and had to move what would you really do, if you couldn't get permission to let.

I know that if there was the oppertunity to let I wouldn't be selling up and still being left with a debt for a property i no longer owned.

Selling up or re-mortgaing may not be an option anyway, in that position I would let without permission.Just make sure everything is tied up tight as you will be miles away from your property. Find yourself a good agent and line up any trades people you trust, make sure all your insurances and certificates are adequate and upto date.