Letting out flat can you advise - Mortgage.

rich744

Hi,

My brother is looking to rent out his flat and travel the world.....

He intends to rent his flat out.

Must he advise his mortgage company? Is this usually a condition of the mortgage?

And what are the consequences (in reality) is they are not advised, and find out that the flat has been let?

Many thanks.....

kingstreet

He should ask his lender for consent to let. He may be part of a block policy, but if he does have his own buildings insurance he needs to inform his insurer. They may cancel his cover when the property ceases to be owner occupied and he would then need landlord-type cover.

The consequences of unauthorised letting? Nothing at one end of the spectrum to the possible ultimate sanction at the other end - being deemed in breach of the mortgage agreement and being asked to repay it. I've never come across that, so it's probably unlikely.

We do suggest potential tenants request sight of the consent to let before they sign up to a tenancy agreement and a letting agent would definitely want a copy.

Werdnal

Mortgage lender must be informed and grant permission to let, otherwise your brother would be in breach of the terms of the loan and could face re-possession. Some lenders are accommdating, and might agree with extra payment for the change, but some refuse. Previous poster said they have never come across a re-po through this, but there have been a couple of recent posts here about tenants receiving notice from mortgage companies in this respect.

House insurance would also need to be aware and may increase premiums or cancel cover, requiring him to make other arrangements.

Your brother should also be aware of the other requirements for letting, ie gas safety certs, deposit protection rules, declaration of earnings for tax, procedure for notice and eviction when he returns and wants his property back. I think he would also need to give a UK contact point for the tenant in case of emergencies.

If he is travelling and may not be contactable for repairs and tenant problems, might be wise putting this in the hands of a letting agent to manage for him, unless you want to be the point of contact in his absence.


PS I have just reread your OP and you mention it is a flat. Is it leasehold? If so he would also need permission from the Freeholder to let.

Marvel1

There is a lot more to it other than seeking permission from the lender and then just renting it out:
http://www.direct.gov.uk/en/HomeAndCommunity/Privaterenting/RentingOutYourProperty/index.htm

Look at the sticky thread - RENTING? Check your LL has permission to let that property.
https://forums.moneysavingexpert.com/discussion/1377883

may_fair

Direct your brother to the Landlord Law blog to get an idea of the legalities of letting. It's essential he does thorough research and knows his legal obligations as LL before going ahead:
http://www.landlordlawblog.co.uk/

He could also consider joining a LL association such as
http://www.landlords.org.uk/

G_M

Yes, and more besides.

As well as the links above, lots more info on the obligations etc in this post and the links therein.

rich744

Thanks to all that have advised on this issue! I will research further.....

Seems that many do just rent out their properties without any of the above considerations and never encounter problems.

Thanks again.

may_fair

rich744 wrote: »

Seems that many do just rent out their properties without any of the above considerations and never encounter problems.

No doubt, but when the worst case scenario is going to prison due ignorance of LL's legal obligations, then it's a very good idea to do the research.

Alter_ego

He should be aware that while he travels the world, it is possible that his tenant could be responsible for withholding tax on the rent and paying it to HMRC.