Higher rate for Consent to let

tribalboy

Hi,

I am trying to let my place and have contacted Halifax for Consent to Let. They have done some calculations & told me that my mortgage payments would go up by £225. Is it normal since this is not a buy to let property. Could I go to independent mortgage advisor's to see if they can offer a better rate and if so would it okay to take it from them.

Going by this I have to pay money out of my pocket to pay the estate agents fees and other expenses. What do people normally do in this scenario

Thanks

diable

tribalboy wrote: »

What do people normally do in this scenario

Thanks

Keep schtum..............

poppysarah

Letting is a business.
You pay more

G_M

If you let out your property
a) it becomes a business, not your home and
b) the mortgage lender faces greater risks

for these reasons it is normal to charge more.

Certainly it is worth 'shopping around' as with any financial decision. But bear in mind not just the respective interest rates, but the switching costs: legal fees, new survey/valuation; application fee etc.

An independant mortgage advisor will help you take these into account.

Keep schtum..............

Doubtless this advice applies to HMRC regarding the rental income too?
And the Health and Safety Executive - you don't really need the expense of a gas safety certificate!

For more info on what's involved with renting, see this post and the links within it.

diable

Also it depends if you want to rent out your property legally as you can off set your interest against your tax bill.

tribalboy

Thanks G_M, for reminding me about your wonderful post. I had seen it earlier and was going to have a look at it again. My estate agent is asking for a fee of 14% which includes rent guarantee and property management. They are basically saying that they will pay up to 6 months rent and take care of the court proceedings & eviction in case the tenant defaults and I don't even have to be there. Is this a good proposition...?

G_M

Rent guarantee agreements. Hmmm.. As always, pluses and minuses!

Hopefully, peace of mind and guaranteed income.

14% is high. but then the guarantee is worth someting.
How does the scheme work? You hand the keys to the EA and they do everything? Find the tenant? collect rent? Arrange repairs/gas safety certificate etc? Read the small print.

Are you happy to hand over decision-making on tenants entirely? The agent will install ANYone rather than have it empty - not usually the best approach. Most LLs would rather have an empty property and no rent than the tenant from hell.......

End of the day it's up to you and depends how hands onyou do/don't want to be, whether you want to maximise income, whether you trust them (read a few threads here for letting agent horror stories too!) etc etc.

tribalboy

Nope doesnt quite work like that. They take care of everything but still keep me in the loop and carry out any work only after I agree.

They do seem to charge ridiculously high prices for EPC and the Gas cert's but I have managed to find cheaper ones for a fraction of the price. I am trying to go through the small print

They have said that there "might" be void periods as well due to no tenant but assure me that it shouldnt happen as they have to give 2 months notice and they aim to replace them within that time. The rent guarantee comes in to picture only if the tenant defaults on payments and refuses to vacate which they handle stuff till the eviction. I am thinking of doing my own checks once they find someone including calling up the previous LL

Plus the EA have been around for 20 years and have been voted the best EA before so I am expecting "something" from them

franklee

tribalboy wrote: »

They have said that there "might" be void periods as well due to no tenant but assure me that it shouldnt happen as they have to give 2 months notice and they aim to replace them within that time.

It's just not that simple e.g. it is possible to leave at the end of a fixed term without notice.

tribalboy wrote: »

Plus the EA have been around for 20 years and have been voted the best EA before so I am expecting "something" from them

Depends what being voted best EA entails, is that an award specifically for the letting side of the business or does it mean they're good at selling houses? Two different barrels of fish. Are they members or ARLA or the like?

Also "Going by this I have to pay money out of my pocket to pay the estate agents fees and other expenses." worries me a bit. Does it mean you will be running the let at a loss and do you have savings to cover costs. In the scheme of things £225 isn't a lot, well it is in some ways but it's not enough contigency IMO you probably need at least six months rent put aside.

G_M

tribalboy wrote: »

Nope doesnt quite work like that. They take care of everything but still keep me in the loop and carry out any work only after I agree.

They do seem to charge ridiculously high prices for EPC and the Gas cert's but I have managed to find cheaper ones for a fraction of the price. I am trying to go through the small print

They have said that there "might" be void periods as well due to no tenant but assure me that it shouldnt happen as they have to give 2 months notice and they aim to replace them within that time. The rent guarantee comes in to picture only if the tenant defaults on payments and refuses to vacate which they handle stuff till the eviction. I am thinking of doing my own checks once they find someone including calling up the previous LL

Plus the EA have been around for 20 years and have been voted the best EA before so I am expecting "something" from them

Ah!
Not really a rent guarantee scheme then! Don't be swayed by meaningless promises like "there "might" be void periods as well due to no tenant but assure me that it shouldnt happen". What this means is
"We want to reassure you so you give us your business whilst at the same time giving you no legally binding promises".

You can get your own 'rent guarantee scheme' like this from the likes of Letsure or Paragonadvance etc.

tribalboy

yes they are members of ARLA, NAEA, The guild of professional estate agents, the property ombudsman (Lettings),OFT, RICS.

Does it mean you will be running the let at a loss and do you have savings to cover costs

That part is the major worry, I might have to fork out something depending on how much the property is let for. I havent got quotes from elsewhere apart from halifax, but if I dont let the property I might be at a greater loss as I have to go overseas and do not want to pay the mortgage on my own.

Do people normally make a good profit in lettings, pardon my ignorance but I havent let before and dont know of any mates who have