Letting without consent to let.

mconnolly81

Hello all,

Apologies if this has been thrashed out on here before, however i seek clarification -

Can somebody with all the facts give me a definitive answer on whether or not you can let out property without consent from the lender. If it a 'no' then can somebody also expand on the consequences of doing so.

It’s not that i'm looking to cut corners, or make an extra few quid, its just that the Halifax are making it extremely difficult for me to get this arranged, including a £1499 'arrangement fee' plus a whole heap of hoops to jump though.

I've spoken to many people who have rented out property for several years who say that you do not need it and it’s not a legal obligation, while others speak of massive legal and financial penalties!!

Your thoughts please........

satchmeister

mconnolly81 wrote: »

Hello all,

Apologies if this has been thrashed out on here before, however i seek clarification -

Can somebody with all the facts give me a definitive answer on whether or not you can let out property without consent from the lender. If it a 'no' then can somebody also expand on the consequences of doing so.

It’s not that i'm looking to cut corners, or make an extra few quid, its just that the Halifax are making it extremely difficult for me to get this arranged, including a £1499 'arrangement fee' plus a whole heap of hoops to jump though.

I've spoken to many people who have rented out property for several years who say that you do not need it and it’s not a legal obligation, while others speak of massive legal and financial penalties!!

Your thoughts please........

Read your mortgage contract, you will be in breach of contract and this probably means they can cancel your mortgage and demand full payment and end the contract. Residential mortgage means you live there, buy to let means you have a mortgage that allows you to let it out. They charge more for BTL because of the increased risk.

G_M

satchmeister wrote: »

Read your mortgage contract, you will be in breach of contract and this probably means they can cancel your mortgage and demand full payment and end the contract. Residential mortgage means you live there, buy to let means you have a mortgage that allows you to let it out. They charge more for BTL because of the increased risk.

Correct.
There is no 'legal obligation' in the sense of it being against the law, criminal, or that you can be chased by the police, Trading Standards or any other government body.

However a contract is a legal document, and the terms and conditions within it are legally binding and enforcible by the (civil) courts.

Banks (lenders generally) distinguish betwen residential and business mortgages as the risks (to them) are different. So the T&Cs within a residential mortgage prohibit renting the property (a business with increased risks).

By breaching the terms of the mortgage you expose yourself to the mortgage being cancelled/called in, or ultimately repossession.

You also expose your tenant to increased risk which is unfair on the tenant.

You are right that some (many? I have no idea) people do not obtain consent from their lender, and in reality it is likely that so long as your mortgage does not fall into arrears, your tenant or someone else does not tell the lender etc, the lender will not know, so there will be no consequences.

However these days there are links everywhere. Are you going to declare your rental income to HMRC? Or commit tax fraud? If you declare, that is one more organisation from whom the lender might find out. Will you tell the Land Registry your new address? What about the council and council tax?

And insurance? Domestic insurance will be invalid, so you need landlords insurance. Most mortgage lenders insist on having their name linked on (or at least seeing sight of) your buildings insurance. If you suddenly switch to a landlords policy they might wonder why....

By hiding your affairs from one organisation, you have to consider doing so from all the others - with increased risk of discovery with every deceipt.

PasturesNew

Your mortgage company will also continue to send mortgage letters to your address... and the tenant, if they're annoyed at something you've done wrong in their eyes, might be tempted to give them a bell.

If you'd broken landlord laws and the tenant came here .... we might even encourage them to report you. We're nice and cuddly like that.

Tiddlywinks

As you have asked the question of your mortgage lender do you not think they will make follow up enquiries if you do not finalise the process properly?

Why do you think you should not have to comply with your contract anyway?

mconnolly81

Easy tiger,

Tiddlywinks wrote: »

do you not think they will make follow up enquiries if you do not finalise the process properly?

Yes i do, hence why i enquired about the consequencies

Tiddlywinks wrote: »

Why do you think you should not have to comply with your contract anyway?

I dont, if i was aware of the breach of contract i wouldnt have posted the original question in first place.

Thank you.

mightymouse

Hi

One point is the Buildings Insurance which would need amending to include renting out, the lender often provides this insurance (charging the borrower)...you would need to transfer away from the lender and arrange the insurance to include renting out.

The lender may still insist on a copy policy?

Werdnal

With so many different agencies who all have access to each others records these days, I do not think it would be long before your lender would find out.

As previously said, you need to change your buildings insurance. You also need to lodge the tenant's deposit in a scheme. You also need to declare your rental income to HMRC. These are atleast 3 opportunities for your lender to discover that you are letting.

Then there are the utilities and Council Tax, which will no longer be in your name. Even things you might not think about, like registering your car at a different address, changing address on your driving licence, your bank acount details etc - all could leave a trail of evidence for your mortgage company to pick up on.

Whats the worst that can happen if you breach the mortgage conditions? Repossession! Do you really want to risk your most valuable asset? Don't do it!

franklee

Werdnal wrote: »

Then there are the utilities and Council Tax, which will no longer be in your name. Even things you might not think about, like registering your car at a different address, changing address on your driving licence, your bank acount details etc - all could leave a trail of evidence for your mortgage company to pick up on.

Good points and also the electoral roll, both the landlord moving elsewhere and the new tenant registering on the electoral roll at the rental address. From what I gather that's used widely for address verification for all sort of things by banks.

In the boom years no one much cared about consent to let as there was little risk as rising house prices bailed everyone out. Cut to now and lenders are much more risk adverse as there is real money to be lost if there isn't enough deposit. I don't think now is a good time to chance an arm.

mconnolly81

Thanks for all the honest and frank replies. Looks like i'm going to have to suffer the huge financial hit.

The lenders though must realise that people out there do let without consent. I guess after the clamp down on overdraft charges and PPI, charging £1499 plus the sharp end of a 1% interest hike its the next way of robbing consumers.

PasturesNew

mconnolly81 wrote: »

Thanks for all the honest and frank replies. Looks like i'm going to have to suffer the huge financial hit.

The lenders though must realise that people out there do let without consent. I guess after the clamp down on overdraft charges and PPI, charging £1499 plus the sharp end of a 1% interest hike its the next way of robbing consumers.

You stop becoming a consumer when you become a business.

Consumer laws to stop you being ripped off no longer apply.

You're in business now laddo. Are we invited to the Xmas Party?