have tenants in my house but not told my mortgage provider

2010

Having read all the replies and lack of response from the OP, is this, as I first thought, a wind-up thread? :rotfl:

jamesd

When does your current mortgage deal on the property end? Any penalty for early repayment? While immediate disclosure is legally required the common approach is to remortgage to a buy to let mortgage when any fixed rate term comes to an end. The BTL mortgage will have a substantially higher interest rate, though a fixed rate one may not be more expensive than an ordinary mortgage take out a few years ago. Halifax will then not know or care what happened because they no longer have money at risk.

On the tax, you take your rental income and deduct mortgage interest (not capital) and costs such as letting agency fees, maintenance and insurance. Any money left over is taxable income that needs to be reported to HMRC. You're probably going to be told by HMRC that you must start to file tax returns every year while you're letting out a property, so start preparing for that now. Keep every receipt and start to learn what is an allowable deduction against income and what against capital gains. Most of it will be allowed against income initially.

You need proper landlord's building insurance, normal domestic insurance won't cover you from the time the tenants moved in. So you're risking losing the value of the property.

Have you purchased another property or are you renting? If you've purchased you need to nominate one as your principal private residence for PPR tax relief on capital gains. In your situation you'd normally want to nominate the new one because you couldn't reasonably claim to actually live at the one you're letting out. You would be entitled to letting relief as well on the let one when you sell it. Make this declaration now or soon if you own two places.

Get a valuation for the property with an effective date when you started letting it. You'll need that for capital gains tax calculation, it's the value at the time you transferred the property to your letting business. Mortgage interest on a loan of up to this value is allowed. That can let you release capital by increasing the mortgage later, if the value goes up.

What you're doing is fine and quite common. No big deal, immediately, just don't let the situation linger.