BTL or lease without the banks knowlege?

nollag2006

All good points chappers

To the OP: if you are using an EA, you should also apply to have rent received without taxes deducted:
http://www.hmrc.gov.uk/CNR/nr_landlords.htm#2

moneydoesgrowontrees

bitsandpieces wrote: »

I thought it could cause problems if you needed to claim on insurance, though? Sorry if I got that wrong.

I work in mortgage department of a bank. Having tennants in the property is in breach of the terms and conditions if not a BTL and will invalidate insurance as a residential mortgage must be lived in by the owner or their family.

G_M

moneydoesgrowontrees wrote: »

I work in mortgage department of a bank. Having tennants in the property is in breach of the terms and conditions if not a BTL and will invalidate insurance as a residential mortgage must be lived in by the owner or their family.

Don't understand the connection with insurance - can you explain?

If the OP has appropriate insurance and the insurer knows there are tenants at the property, why would the insurance be invalid just because the bank does not know? The OP may well be in breach of the T&Cs of his mortgage - but not his insurance!

Pitlanepiglet

G_M wrote: »

Don't understand the connection with insurance - can you explain?

If the OP has appropriate insurance and the insurer knows there are tenants at the property, why would the insurance be invalid just because the bank does not know? The OP may well be in breach of the T&Cs of his mortgage - but not his insurance!

Totally agree, and Moneydoesgrowontrees - it's tenant - one "n" in the middle. It's good to see that you are well up on your subject!

nollag2006

moneydoesgrowontrees wrote: »

I work in mortgage department of a bank. Having tennants in the property is in breach of the terms and conditions if not a BTL and will invalidate insurance as a residential mortgage must be lived in by the owner or their family.

I think its obvious that regular owner-occupier insurance would not apply in this instance. THE OP would require new building insurance for a tenanted property, which in my experience is just as cheap as home owner insurance.

The issue should not be confused with consent to let.

G_M

Pitlanepiglet wrote: »

Totally agree, and Moneydoesgrowontrees - it's tenant - one "n" in the middle. It's good to see that you are well up on your subject!

Works in a bank. Says it all....

:T:T

franklee

chappers wrote: »

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.

Unfortunately many "accidental" landlords are unrealistic about the risks and costs of letting. So many times on here I've read that the monthly rent just about covers the monthly mortgage so that's OK. No mention of letting agents fees, repairs, having to pay out when the property is empty, bad tenants etc. Therefore a few months down the line it's more than likely the debt is bigger rather than smaller or the landlord has to subsidise the rental property and the second or third tenant in is left in a precarious position with an illegal tenancy and a real risk of repossession.

Bear in mind also that a tenant evicted in breach of the tenancy agreement can also sue the landlord for this, if they think it worthwhile.

I also noticed a paragraph on that shelter page I lined to before:

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

"Can people with mortgages legally grant a tenancy?

Yes, but only if their mortgage deed says it is allowed and/or they have their lender's permission. Most mortgage agreements do not allow tenancies to be granted without permission, and many lenders will try to repossess the property if they find out that this has happened."

Really what we need is some legislation to protect tenants as was promised, but just got as far as consultation. This at a time when the government has tried to help home owners stay in their homes, but tenants are still left with no protection if the landlord hasn't got consent to let :mad:

roger196

franklee wrote: »

Really what we need is some legislation to protect tenants as was promised, but just got as far as consultation. This at a time when the government has tried to help home owners stay in their homes, but tenants are still left with no protection if the landlord hasn't got consent to let :mad:

Hopefully a private members bill in January 2010.

chappers

Franklee generaly I would agree with you wholeheartedly, but sometimes desperate times require desperate measures. If I had to move to India and my only choices were to let without consent, sell and be left with a debt(lender may not even allow this)or to just leave the property empty and carry on paying the mortgage then I know which I would choose.

You are correct letting without consent would be a breach of the terms of most resi mortgages but it is highly unlikely that a lender would reposses for that reason alone, they would most probably use it as argument to back up arrears.

A legal tenancy would be created in the absence of consent to let and you are right the tenant can in theory sue for breach of contract should the LL not be able to fulfil the contract.

PayDay

mountaingirl wrote: »

Would you advise we go to the bank and ask for a Consent to Let or should we just rent the flat out without telling the bank?

Thanks

Don't listen to some of the idiots on an internet forum telling you to let without consent. Will those strangers help you if you get caught? Answer - No.

What if your mortgage company select you as one of their random checks and asks for a copy of your insurance, which they are well within their rights to do? A residential mortgage shouldn't have a landlord insurance.

What if a letter slips though the mail redirection and your tenant sends it back to the mortgage company? I had quite a few letters addressed to the previous owner of my house and he had a redirect with royal mail.

What if your tenant checks the land registry and sees that the mortgage company has you listed as living at the flat?

What if the tenant has a fire and you need to claim on your insurance? Insurers look at ways not to pay for claims?

What if your tenant sends an envelope to your name at the address they live at and find it doesn't arrive on their doorstep, meaning you are pretending you live at the flat and are redirecting mail?

What if the tenant finds out they should be checking with the tax office that you are registered as an overseas landlord for tax purposes?

What if.........

What if..........