Should I rent without Buy to Let or consent??

lju00dt

I bought my house with a friend in 2007 on a 100% interest only mortgage of which very little has been paid off.

2 years ago he moved out with his girlfried and live in a rented house. My girlfriend moved in and covered his part of the mortgage payments.

Another 2 years later I wish to now move out in to the house my girlfriend is planning to buy and she cannot buy unless she has me to cover half the mortgage. I have looked into the options available to me and contacted my mortgage lender.

We cannot sell as the house is approx 30,000 in negative equity meaning renting is the only option.

My mortgage provider said they can only 'consent to let' for one year, which is no good as I need to rent for longer. According to them I would have to live in it again after that year.

They cannot do a buy to let as there is no equity in the house and they need at least 25% equity, plus if I did go to another lender i would face a 4 grand fee for breaking the fixed term arrangement.

So basically they are saying I am stuck until I can sell or I can cough some 30k out of nowehre....

However, what is stopping me from moving out, renting privately and not informing the mortgage lender I have gone? They have no knowledge that the other person is no longer living there so I don't see how they would find out if I left too and rented privately?

I would ensure that i had all the relevant checks, paperwork and insurance and with the little extra i could gain from the rental i can slowly start paying off some more of the mortgage.

Legally I don't believe I could be done for fraud as I didn't buy the house on a residential mortgage with the sole intent of renting it out and the mortgage provider has been less than helpful.

I wish to move on with my life as the area where I live is not where i wish to live and raise a family with my girlfriend. But the rental market in the area is very good.

Does anyone have any advice on this or any major reasons why I shouldnt go ahead and rent privately without the mortgage lender knowing about it?

somethingcorporate

Welcome to MSE.

Not having consent to let could invalidate your various insurances (check the T&Cs before signing up).

It puts you in breach of contract with your mortgage company so if you do get shopped they can demand immediate repayment.

My concern would be if you don't take your contract seriously why would a tenant of yours when renting from you?? You hardly have any right to complain if / when they stiff you for a few months rent.

Remember you will need to declare and pay tax on any income (regardless of whether you make a profit it will still need declaring).

This is not the right way to become a landlord.

theartfullodger

House & mortgage in joint names with "friend"?? If so you are both in the same, negative equity, hole.. that GF has been paying "his" share is simply sticking plaster..

Sorry to be blunt but have you considered bankruptcy & then starting with a clean sheet?? I kinda doubt you'll clear £30k in the time it takes to come out the other side of a bankruptcy deal..

mynameisclare

Bankruptcy seems a rather extreme course of action when there's no reason why OP actually HAS to move out. He just wants to.

Sorry, but if you're not able to rent properly then you should stay put and wait until you can afford to move out.

CLAPTON

just accept their offer on the one year and negoiate in 12 months time

G_M

This is one of those troublesome situations.

I echo the warnings above, and hesitate to recommend letting, (even if you can find a tenant - more and more these days agents and tenants are asking landlords for proof of BTL/CTL from their lenders - it's common sense self-protection).

Having said that, I also hesitate to advocate bankrupcy. Personally I'd do everything in my power to avoid that step.

But your 'friend' is in this too. His name is on the deeds/mortgage agreement, so the £30K negative equity is in reality £15K each. Maybe that is a more achievable savings goal?

Or can you agree to hand back the property to the lender without actually going bankrupt? Either without, or after, defaulting on payments? You'd still owe the outstanding balance but may be able to negotiate time to pay, or a wrie-off....?

Ultimately, letting without CTL is a possibility. Insurance? May/may not be invalid. Tenants shafted? Yes if you subsequently default on mortgage, or the lender gets wise and repossesses.

But you might find a tenant willing to rent without proof of CTL, you might turn into a responsible landlord, understanding and complying with your other commitments, and the finance might work out all right if you get good tenants, no voids, regular rental income, minimal repair (etc) expenses, tax right-offs etc etc.

Sorry - no simple answers. More info here.

franklee

Apart from the sticky thread on this, last few pages since the law changed, the latest discussion is here:

https://forums.moneysavingexpert.com/discussion/3405685

Hoping that OP will let us know if he got insurance that's valid without consent to let but the initial calls didn't sound promising.

Plus if the lender's own checks don't flag this up which is increasing more likely, a disgruntled tenant may just dob you in.

Also I wouldn't want to let without at least six months rent contingency as if the tenant fails to pay rent it may take that long to get them out and during that time you still have your landlord's obligations.

Put me down as a "no" then.

prudryden

I wouldn't even consider letting out a property if I couldn't get landlord's building insurance. When you apply, you need to tell them that you don't have consent to let from the lender. When I got my insurances, it wasn't a problem, but maybe things have changed. They only wanted to know about the property (brick, tiled roof etc.) and the type of tenants. I guess storm damage, fire etc. is fairly much the same whether you have lender's consent or not, not really a lot to do with their risk factor.

But don't do anything until you check. Also, be prepared that the lender, if they find out, could ask for full payment of the loan. Not likely, but certainly a possibility.

overnetworld

I would get the consent for the year and reevaluate in a years time.

Also agree with the statement about talking to your friend. I personally would get consent to let, get the new property and after year think about foreclosing on the house

gazfocus

Is your friends name on the deeds too? If so, it sounds like he's going to be laughing all the way to the bank anyway....owns half a house (whether in negative equity or not), not having to pay his share of the mortgage because your gf is but will still benefit when you sell the house? Some friend eh?

princeofpounds

Is your friends name on the deeds too? If so, it sounds like he's going to be laughing all the way to the bank anyway....owns half a house (whether in negative equity or not), not having to pay his share of the mortgage because your gf is but will still benefit when you sell the house? Some friend eh?

He'll be laughing unless the debt is called with negative equity. Then it affects him and his credit record all the same.