consent to lease

Rainbow12_2

Can anyone out there help me? I made enquiries with my lender to rent out my property and they have refused citing that i owe 89% of it and they would only consider if giving me consent if they deemed it a necesity which they dont since i owe more than 75%. The property management company have said i need to get consent before i should rent it out. Whats the consequences of renting it out without consent and do the mortgage company check? I really dont understand as i can rent it for more than the mortgage and i have over paid for the last 18mths and surely its better to have it rented out rather than have it stand empty?:mad:

CloudCuckooLand

11% is not enough equity for the Lender to be sure they will get what they are owed in the event of repossession, due to fees and costs that are incurred, and the selling price being hit by virtue of being a repossession.

The risk of void periods and/or tenants failing to pay rent, make Lenders twitchy. For a full-blown buy-to-let mortgage you would need 20% to 25% equity, a big fee and higher interest rate, so you can see that consent-to-let is a big risk with such a small amount of equity. A risk you are asking them to carry.

No-one is making you rent it out. You can live in it, or sell it.

sharpee

Most lenders will look for more equatity in a home before they consent to let the property.

Is there a reason why you can't live in it yourself or sell it?

G_M

A condition of your mortgage was that it would be resided in by you and/or your family.

Buy to let mortgages are different agreements with different terms.

lb364

How big is the property? Could you perhaps let out one of the rooms..? Would that be allowed...

Failing that, could you sell it and buy a cheaper property on a btl mortgage with the proceeds?

Nosht

Rainbow12 wrote: »

Can anyone out there help me? I made enquiries with my lender to rent out my property and they have refused citing that i owe 89% of it and they would only consider if giving me consent if they deemed it a necesity which they dont since i owe more than 75%. The property management company have said i need to get consent before i should rent it out. Whats the consequences of renting it out without consent and do the mortgage company check? I really dont understand as i can rent it for more than the mortgage and i have over paid for the last 18mths and surely its better to have it rented out rather than have it stand empty?:mad:

The main risk is that the insurance becomes null & void if change of use is not declared. :eek:

N.

phlash

Nosht wrote: »

The main risk is that the insurance becomes null & void if change of use is not declared. :eek:

N.

And that the lender pulls the plug on you, since you're committing mortgage fraud.

Skipton penalise you for not telling them...

"If you have authorisation to the letting of your property your rate will increase by 0.50% for Loan To Values of up to 80%, and by 1% for LTV's of greater than 80%.

If the property is being let without authorisation the figures increase by 1.50% and 2.00% respectively.

The rate increase will be added to whatever your rate is at the time."

Mortgage fraud

"Mortgage fraud occurs where individuals defraud a financial institution or private lender through the mortgage process.
The definition of fraud in the Fraud Act 2006 covers fraud by false representation and by failure to disclose information where there is a legal duty to disclose.

False representations can be made explicitly or implicitly and may occur even where you know only that the representation might be misleading or untrue.

The value of a mortgage obtained through fraud is the proceeds of crime. Under the Proceeds of Crime Act 2002, you risk committing a money laundering offence if you acquire, use, have possession of, enter into an arrangement with respect to, or transfer this criminal property."

Source: http://www.lawsociety.org.uk/productsandservices/practicenotes/mortgagefraud/2607.article#mf2_1

silvercar

Mortgage fraud

"Mortgage fraud occurs where individuals defraud a financial institution or private lender through the mortgage process.
The definition of fraud in the Fraud Act 2006 covers fraud by false representation and by failure to disclose information where there is a legal duty to disclose.

False representations can be made explicitly or implicitly and may occur even where you know only that the representation might be misleading or untrue.

The value of a mortgage obtained through fraud is the proceeds of crime. Under the Proceeds of Crime Act 2002, you risk committing a money laundering offence if you acquire, use, have possession of, enter into an arrangement with respect to, or transfer this criminal property."

Source: http://www.lawsociety.org.uk/product....article#mf2_1

Which would apply to people obtaining a mortgage with the intent to let the property out ie obtaining money by deception.

In this case the OP obtained the mortgage to live in the property - perfectly legally and now wants to let the property. This would be a breach of mortgage conditions and therefore the lender could (but very unlikley) demand the mortgage be repaid. It is a matter between the lender and borrower it is not a criminal matter. Homes are repossessed when people don't keep up with repayments, not when they do.

Jowo_2

Rainbow12 wrote: »

..I really dont understand as i can rent it for more than the mortgage

have you factored in tax, repairs, voids, non-paying tenant?

franklee

More likely the lender will put on some admin fees and up the interest rate should they discover an unauthorised let. A landlord with loads of equity and rent easily covering all running costs would have little problem meeting a lender's consent to let criteria probably being charged less than he would be if an unauthorised let came to light. Worst case he'd be able to afford getting a BTL mortgage.

There could well be a problem for those accidental landlords who come on here saying they can't afford a to pay more and the rent barely covers the mortgage payment. For those an extra couple of % charged if an unauthorised let is discovered may well push them into mortgage arrears, especially if that goes alongside a long void, expensive repair or a non-paying tenant. If on top if that they have little or no equity then I see the lender wouldn't give them much truck before wanting their money back one the arrears mount up.

Then there is the effect on the tenant as the lender doesn't have to recognise the tenancy agreement if it's an unauthorised let and mortgage was taken out before the tenant moved in.

MissMoneypenny

franklee wrote: »

More likely the lender will put on some admin fees and up the interest rate should they discover an unauthorised let.

On the MFW board there was a thread recently, moaning about the change in Terms and Conditions of some lenders. The T&Cs I read was from NW who stated there were interest penalties for those that rented without being given Consent to Let.

franklee wrote: »

For those an extra couple of % charged if an unauthorised let is discovered may well push them into mortgage arrears, especially if that goes alongside a long void, expensive repair or a non-paying tenant.

It seems that one missed mortgage payment these days is all it takes to ruin a persons credit rating for the next 6 years.

Another problem for the OP is that a decent letting agent will ask for proof of consent to let. If you are forced to go to the other type of letting agent, what else are they prepared to lie about/get wrong? A letting agents errors are the landlords responsibility.