Renting out on a "normal" mortgage

Guy_Montag

Don't forget to declare your earnings to to HMRC too.

clutton_2

let's hope you know that there are 70 different acts of parliament to comply with and that you mUST get your gas applicances CORGI landlords safety inspection checked out immediately.

prudryden

(1) Insurance should not be a problem. However, they do need to know if you are letting out the property. They would not be interested whether you have permission from a commercial lender or not.

(2) The lender can demand full payment of the loan if you break their contract. However, in old English "they can not clog the equity of redemption". In lay terms, they can not refuse you the right to pay off the loan in full.(Providing you have the means.) In actual practice, if you have been making regular payments for a number of years and they are comfortable with the loan, they may decide not to go thru the hassle of repossessing. A business decision.

Sparky29

I rented out my property for several years when I had to work away. Didn't bother to tell the BS as it would have cost me. Some BS's put your interest rate up or charge you a fee to check your tenancy agreement. They normally insist that you use an agency. In my experience all agents do is find you any tenant that is willing to pay the rent wether they are suitable or not and then take a big chunk of the rent every month. If you have any problems it is up to you to sort them out unless you pay the agent an even bigger percentage every month. I have personally advertised for tenants and vetted them and feel better that I have actually chosen and know my tenants. Agents in my opinion get a lot of money for doing very little and then charge you every six months for getting the same tenants to resign the contract again.

Get proper Land Lords buildings insurance though. Insurance companies will not pay out if you do not tell them.

If you pay the mortgage every month the BS are unlikely to find out. Also your BS correspondance address can be different than your property address as long as you notify them in writing. This way you can get your mortgage statements and MIRAS 5 form for your tax return sent to you direct every year.

Voyager2002

Sparky29 wrote:

I rented out my property for several years when I had to work away. Didn't bother to tell the BS as it would have cost me. Some BS's put your interest rate up or charge you a fee to check your tenancy agreement. They normally insist that you use an agency. In my experience all agents do is find you any tenant that is willing to pay the rent wether they are suitable or not and then take a big chunk of the rent every month. If you have any problems it is up to you to sort them out unless you pay the agent an even bigger percentage every month. I have personally advertised for tenants and vetted them and feel better that I have actually chosen and know my tenants. Agents in my opinion get a lot of money for doing very little and then charge you every six months for getting the same tenants to resign the contract again.

Get proper Land Lords buildings insurance though. Insurance companies will not pay out if you do not tell them.

If you pay the mortgage every month the BS are unlikely to find out. Also your BS correspondance address can be different than your property address as long as you notify them in writing. This way you can get your mortgage statements and MIRAS 5 form for your tax return sent to you direct every year.

The above is VERY bad advice: dangerous, in fact. If you don't tell the mortgage lender and they then find out, you are in very serious trouble. I know someone who got caught like this -- his tenants opened a letter from his mortgage lender and effectively blackmailed him, so that he could not collect any rent from them for about three years!

Different lenders have different policies in this situation: I think I had to pay a fee of about 25 pounds, and then was paying interest at the standard variable rate for a while (although some deals for residential borrowers were also available to me as an absentee landlord). The basic message is: the risk of things going wrong if you don't tell your lender is unacceptable, while the cost of telling your lender can be very low.

Arrange your insurance separately, and shop around. I have generally found that the best value on landlord insurance was offered by SAGIC, an insurance company owned by the Salvation Army. They did NOT insist on me using a letting agent, nor impose any unreasonable conditions.

prudryden

A person commits an offence if, intending to act to a person's detriment and without reasonable excuse, opens a postal packet which they know or suspect to have been delivered incorrectly. Postal Services Act 2000, section 84.
Blackmail is also illegal.

Why didn't your friend go to the lending company and pay his fees instead of losing 3 years rent? Then have the tenants thrown into Wandsworth Prison. Something doesn't make sense.

Sparky29

Sorry to hear that your friend had a bad experience voyager2002. In my opinion though he didn't handle the situation particuarly well though.

A friend of mine told his lender who put his mortgage rate up and insisted he used an agent. The agent found him tenants without checking them properly. After a couple of months they stopped stopped paying rent. The agent said it wasn't their problem and he had to deal with the tenants to evict/ reclaim any rent due. It was then he found out that the tenants previously lived in a squat. To cut a long story short, he started court proceedings for eviction but his tenants eventually moved out when a leak brought the ceiling down. Then he discovered his tenants had painted all the walls and ceilings black which was a bit of a nightmare when repainting. He was left thousands of pounds out of pocket. The fact that his BS knew that he was letting the property wouldn't have made a blind bit of difference. As prudryden says about lenders "They just want a piece of the action."

You get good tenants and you get bad ones. Its the nature of the business. As long as you can afford to cover the mortgage payments during periods when your property is empty the BS is unlikely to find out. And as I said above, have a different correspondance address for your mail. It would have avoided the problems voyager2002's friend had. I have done it for over eight years without any problems.

ilovesaabaeros, have you made any hypothetical enquiries to the C&G to see what their policy is. Each lender is different and it may not cost that much. If you have a large mortgage and they adjust your interest rate would you be able to afford it?

franklee

I did have a mortgage with C&G, although it was 10 years ago, and told them when renting out my home. There were no charges, extra interest or conditions imposed.

You should tell them, otherwise they won't recognise the AST and your tenants could get booted out at short notice should you get repossessed.

As a tenant I knew my landlord hadn't informed his mortgage company *without* opening the letters. I knew from the land registry who had a charge on the property and when they sent letters their name and logo were on the outside of the envelope with the words your mortgage clearly visible through the address window. So it would be easy for a tenant to grass you up, especially as they have a right to protect the AST that you signed with them.

A_Nice_Englishman

with apologies to those who have read it before, here is my usual advice to people thinking about starting a property rental business.

Starting a property rental business is like starting up any other business. You need a business plan.

Do void periods, bad debts, repairs, redecoration, legal fees,insurance, agents fees, costs of evicting bad tenants, rises in interest rates to, say, 8% and possible falls in property values figure in your business plan?

Are you familiar with the 50 Acts of Parliament and 70 sets of regulations which may apply? Did you know you can be held responsible for the anti-social behaviour of your tenants?


Then you need to look at the taxation side. Any profit you make will be taxed at your highest rate of income tax and if you make a profit when you sell you will have to pay Capital Gains Tax. though there may be reliefs, especially as you have lived in the property yourself.

prudryden

English - Did you change something? Move a comma around or something?:beer: