Been refused consent to let by Halifax

silvercar

So what happens when you get consent to let for two years, find a tenant. Tenant wants to stay and the lender won't renew consent to let?

jessicar

They're just saying they won't charge anything extra for two years or change the mortgage from a residential mortgage in that time, not that they'd withdraw consent. But it's really designed as a short-term measure, if the home-owner was thinking of it as a long-term option, they'd expect the mortgage to be changed to a BTL.

It's intended to provide flexibility for people who want to travel abroad or rent out short-term without incurring extra cost and changing the whole mortgage to a BTL.

In my neighbour's case she wants to return to this country in two years and live in the house again or sell it, and any prospective tenants are being told that's the case.

I guess if she changed her mind, and she's been successfully letting it out for a couple of years and paying the mortgage, they'd be unlikely to refuse consent having just granted it for a couple of years. She'd just have to change the nature of the mortgage and pay more.

silvercar

I thought there is a real risk that a lender would only agree to CTL for a max of say 3 years. So after that time you would have to evict the tenant. Now the only way to evict a tenant, if they refuse to leave after being given appropriate notice, is to go to court. Court takes time as does appointing baliffs, by which time the CTL would have lapsed. According to some on here, that means the tenant is not protected, the property is not insured, the landlord could be fined or imprisoned....

VIGILANT22

silvercar wrote: »

I thought there is a real risk that a lender would only agree to CTL for a max of say 3 years. So after that time you would have to evict the tenant. Now the only way to evict a tenant, if they refuse to leave after being given appropriate notice, is to go to court. Court takes time as does appointing baliffs, by which time the CTL would have lapsed. According to some on here, that means the tenant is not protected, the property is not insured, the landlord could be fined or imprisoned....

The consent to let was subject to the property being marketed to sell, not to have tenant for 3yrs!

jessicar

I don't think that letting out your property is ever going to be entirely risk-free, and I imagine that she would need to allow herself enough time to evict the tenant if necessary. In her case, she had a fantastic job offer and I doubt she'd have turned it down just in case that might happen to her in a few years time. But she would also know well in advance about coming back so that would give her time.

Also, by that time I think that she's anticipating owing less than 75% of the value of the property, so it would be easier for her to convert to a BTL.

There must be plenty of landlords who don't want to rent out their properties permanently who are taking a risk that by the time it comes to selling or wanting to move back into the property that their tenant won't budge.

Renting out property always involves risk, which people attempt to mitigate, but they continue to do so because to them the benefits outweigh the potential risks. I've been told a lot of horror stories about houses being stripped bare, and advised not to rent out my house, but at that rate you probably wouldn't do anything.

Also, weighing the potential risk up against the fact that if she had sold her house and taken the money abroad, the exchange rate right now being what it is...... and then having to pay to buy a house again when she comes back... Most people contemplating going over are choosing to rent their properties out for a while as opposed to selling up.

VIGILANT22

Aberdeen...........abroad!!????........the exchange rate !!!!....:T

:rotfl::rotfl:

jessicar

VIGILANT22 wrote: »

Aberdeen...........abroad!!????........the exchange rate !!!!....:T

:rotfl::rotfl:

Yeah we went off on a tangent, I didn't expect you to be able to follow it

VIGILANT22

No I am glad you shared the humour........;)

Thrugelmir

jessicar wrote: »

I don't think that letting out your property is ever going to be entirely risk-free, and I imagine that she would need to allow herself enough time to evict the tenant if necessary. In her case, she had a fantastic job offer and I doubt she'd have turned it down just in case that might happen to her in a few years time. But she would also know well in advance about coming back so that would give her time.

Also, by that time I think that she's anticipating owing less than 75% of the value of the property, so it would be easier for her to convert to a BTL.

There must be plenty of landlords who don't want to rent out their properties permanently who are taking a risk that by the time it comes to selling or wanting to move back into the property that their tenant won't budge.

Renting out property always involves risk, which people attempt to mitigate, but they continue to do so because to them the benefits outweigh the potential risks. I've been told a lot of horror stories about houses being stripped bare, and advised not to rent out my house, but at that rate you probably wouldn't do anything.

Also, weighing the potential risk up against the fact that if she had sold her house and taken the money abroad, the exchange rate right now being what it is...... and then having to pay to buy a house again when she comes back... Most people contemplating going over are choosing to rent their properties out for a while as opposed to selling up.

Each case has to evaluated on its own merits.

The current LTV isn't how an underwriter would look at the matter. The fundamental question in this is what would the property realise in a firesale at auction. (The lender wants to turn the property back into a liquid asset as soon as possible). After deduction of all repossession and sale costs does this clear the mortgage debt with a reasonable degree of comfort, if say property prices fell 15% in open market terms in the interim.

Converting to BTL comes at a cost in higher interest charges. Making a profitable return less likely.

Exchange rates are working for those who banked the money and travelled abroad. As the £ has been in decline against major currencies for a protracted period. Buying in the UK has worked to the advantage of a few. I have a friend who has lived and worked in Sydney for 25 years that has bought a retirement flat in Devon. Ready for when she returns.

grey_lady

There's an awful lot of if, but's and maybe's and what if's on here.

For example, 'the landlord could be fined or imprisoned' now when MissMoneypenny mentioned a jail term she was referring to the landlord having no gas safety certificate - (and I would imagine some serious
harm coming to the tenant as a result of this) which is a bit different to getting consent to let. Everyone with a gas boiler should get a safety certificate whether they intend to let or not.


The being sued by the tenant possibility that MissMoneypenny referred to I'm not sure could happen either, as the tenant would have to prove that they had suffered actual losses, and presuming the mortgage was being paid and nothing had gone wrong, then I'm not sure what they could claim for. Or if a CTL arrangement come to an end after a couple of years then as long as the landlord gives 2 months notice then I dont see what they could claim for.

Also, its naughty and posters here may not like it, but lots of people do rent out without telling their lender, that doesnt mean they dont pay their mortgage and dont have a gas safety certificate, nor does it mean their buildings insurance is necessarily invalid. For example in flats where the whole building is insured on one policy.

But I'm pretty sure the OP has a good understanding of all of the risks / potential problems by now and is probably doing the wisest thing by trying to get the lender to reconsider. Its a shame that the Halifax has such a high fee / interest rate for doing this, when other lenders e.g Nationwide dont add these kind of charges.