No permission to let - Should I sell the flat or keep it?

VV17

Hi everyone,

My situation is slightly complicated so please bear with me if this message is a bit long.

I looked into buying my first house last year and got my offer accepted before Xmas. The exchange process took a long time and my flat was exchanged and completed in Mid March (just a few weeks ago) and I took out a £112.5k (90% LTV) mortgage with HSBC.

My circumstances have changed. My partner has been offered a job in London and we're planning to move to London in July. I have called HSBC and asked them whether I can let my flat out. I was told that they will not allow it within 6 months of the purchase so I could either:

1) sell the flat
2) remortgage it with some other bank which would let me let it out
3) keep the flat and not let it out

The mortgage repayment is £600 and the potential rental income is £750.

My questions are:
1) My partner's sister is looking for a place to stay so can I let it out to her. If I do let it out to her, we will not sign any agreements, etc. Do I still need HSBC's permission to let?
2) Is there anything I can do to get HSBC to let me rent the flat out?
3) Do you know any banks that will let me remortgage the property and let it out? I know that BTL mortgages are expensive and they require a higher deposit so ideally I'd like to avoid that.
4) What would you do if you were in my situation?

If you have any idea how I can get out of the situation without suffering a huge loss, please share it. Thank you very much!!!!:):)

G_M

My questions are:
1) My partner's sister is looking for a place to stay so can I let it out to her. If I do let it out to her, we will not sign any agreements, etc. Do I still need HSBC's permission to let? Are you going to take rent (or payment!) from sister. If so, you are renting, so yes.
2) Is there anything I can do to get HSBC to let me rent the flat out? Wait 6 months by the sound of it!
3) Do you know any banks that will let me remortgage the property and let it out? I know that BTL mortgages are expensive and they require a higher deposit so ideally I'd like to avoid that. Visit an IFA
4) What would you do if you were in my situation?Visit an IFA

Fire_Fox

As you have a mortgage I assume you are in paid employment, presumably you are not going to relocate until you have found another job? Is there any reason why your partner cannot move into lodgings and you remain where you are until (a) you have found a job and (b) you gain consent to lease? I am perplexed as to see why your partner would apply for a job in London at the same time as you commit to a flat elsewhere if it was critical you live together, so I assume it is not.

Have you read your long lease to see whether subletting is permitted or if you also need the consent of the freeholder? Being a landlord really is not as simple as you are making out, you cannot simply offset the income against the mortgage - you need to factor in service charges, ground rent, landlord's insurance, buildings insurance and will need to complete a tax return (can not write off the capital repayments). Regardless of you giving the tenant a written contract you will take on all the rights and responsibilities of a landlord and you will be party to a verbal AST the minute you accept rent. If the tenant does not pay rent how will you manage the mortgage? If you split with your boyfriend you are aware you cannot simply move back in? What are your plans if there is an emergency with the heating or plumbing - who organises repairs, can you afford them?

If I were in your shoes I would sit tight for the next six months. If I had a two bedroom flat I would move into the smaller bedroom and let the larger room to the sister for a tax free additional income. You then have the opportunity to build up some savings which can help pay the mortgage if you find yourself out of work/ your tenant defaults or decides to move out. The general concensus is that you need at least three months mortgage payments set aside for a 'rainy day'. Given the value of your flat I suspect you are currently living in the north of the country, in that case be under no illusions that London is a VERY expensive place to live, and can be a very lonely place for someone on a low income or benefits.