Consent to Let

Lisa1978

What happens if you are awaiting a consent to let form, but when you call looking for the form, they mortgage company say 'thats right, you've been letting the property out without authorisation', the form is in the post, fill it in straight away and return???
What could effectively happen now? I have been paying the mortgage every month, never missed a payment.

BitterAndTwisted

Have you been letting the property without getting consent from your lender first?

Presumably if the form is in the post they are content to give you the consent, so just fill it in and send it back.

Lisa1978

Yes... unfortunately due to the economic climate i am not in a position to sell, as in negative equity and have been 'pushed' into having to let it out, while i moved in with my partner. Thats a relief, thank you

BitterAndTwisted

Well, here's hoping that everything turns out OK. Don't forget to declare all of the rental-income on your tax-return...

Lisa1978

I will do.... i have been letting it out a while, should i complete a tax return for this year or for the year going forward once i get the consent to let agreed?
Also, i did read that if i am earing <£2500/year, which i am as letting out at a small loss each month then i can instead change my code via my PAYE in work and therefore not fill in a self assestment? Help please :)!

00ec25

Lisa1978 wrote: »

I will do.... i have been letting it out a while, should i complete a tax return for this year or for the year going forward once i get the consent to let agreed?
Also, i did read that if i am earing <£2500/year, which i am as letting out at a small loss each month then i can instead change my code via my PAYE in work and therefore not fill in a self assestment? Help please :)!

you notify HMRC of the PROFIT you have made from letting it out (ie rent received minus eligible costs). You MUST notify from the date you started to receive rent - the date you get consent to let from your mortgage company is irrelevant as to when your tax liability starts, or are you intending to commit fraud?

if this profit is <£2,500, you simply send them a letter stating how much profit you have earned and they may (at their discretion) adjust your tax code to collect the tax due on that profit (assuming you are on PAYE).
If they decide they will not allow a tax code adjustment, there is nothing you can do about it, they will instruct you to do a full SA return and that is that

you do realise that you can make an overall "loss" but still have tax to pay because your "loss" (in real terms) may not be a loss in tax terms?

if you are making a (proper) tax loss then they will not adjust your tax code as you cannot offset your property income loss against your other income, it can only be offset against (future) profits from property renting . Post again if you don't umderstand this

jp1982

I am in the process of applying for consent let with NRAM as i too am in negative equity and not in position to sell but want/need to move. Your lender may be different but NRAM state that if you choose to let prior to receiving consent, or if the application is refused, then you are in breach of the mortgage condition which may lead to penalties or ultimately repossession. I don't mean to worry but i wouldn't assume that just because they have sent the forms that they will be happy to grant consent. I was informed by a financial advisor that if i am unable to meet the conditions (ie. owe less than 70% of value of the house and can achieve 120% of monthly repayment in rent) then the only way they are likely to consider the application is if i offer to make a considerable payment to reduce my mortgage amount.

Each lender is apparently different so i would look further into your lenders web site

Hammyman

Lisa1978 wrote: »

Yes... unfortunately due to the economic climate i am not in a position to sell, as in negative equity and have been 'pushed' into having to let it out, while i moved in with my partner. Thats a relief, thank you

Worst case they can foreclose on the mortgage with immediate effect leaving you next to no time to find another mortgage or hand over the keys.

You are in a sticky situation because if they refuse permission, you have tenants to sort out and you have legal obligations to them and you may find you have to "buy" them out of their tenancy or at least cover their costs for moving which, IME, are never less than £1000.

I know personally someone who lost their house because they let it without permission.

silvercar

Hammyman wrote: »

I know personally someone who lost their house because they let it without permission.

Did they keep up with the mortgage payments?

I have never seen a case on here or in the press where a lender has repossessed someone who has kept up with mortgage repayments, so it would be very interesting to see details if you can post a link.

jp1982

NRAM state the penalties will be imposed regardless of you continuing to pay the monthly mortgage as you will be in direct breach of the conditions that you signed up to when taking out the original mortgage. Obviously NRAM exist to retrieve money as quickly as possible so it could be that they are stricter than others and i have not heard of them sanctioning repossession but they were eager to emphasise that it is an option that would be considered?

Hammyman

silvercar wrote: »

Did they keep up with the mortgage payments?

Yes, everything was up to date. I've been on the other end of this as a tenant and we got 2 weeks notice to quit from the mortgage company. Being naive at the time, we took that at face value but as it turns out, it was for the best as we ended up getting a council house out of the blue. Still to this day I'm not sure how that happened.

I have never seen a case on here or in the press where a lender has repossessed someone who has kept up with mortgage repayments, so it would be very interesting to see details if you can post a link.

Its a few years ago so I wouldn't know where to find them if they were published online.