permission to let...

tostaky

we have a mrtgage on a flat with barclays. we want to buy another flat (to be near a good school). we asked barclays if we could keep the flat and buy a new one they said no, even so we have enough "affrdability".

so we asked around and got a mortgage approved with natwest and they said we could keep the flat.

question is - if we go back to barclays and ask for a permission to let can they refuse it because we have another mortgage somewhere else? presumably a permission o let will involve credt check etc and us disclosing we have another mortgage?

finally what are the implications FOR THE LANLORD of not having a permission to let?

many thanks

Werdnal

tostaky wrote: »

we have a mrtgage on a flat with barclays. we want to buy another flat (to be near a good school). we asked barclays if we could keep the flat and buy a new one they said no, even so we have enough "affrdability".

so we asked around and got a mortgage approved with natwest and they said we could keep the flat.

question is - if we go back to barclays and ask for a permission to let can they refuse it because we have another mortgage somewhere else? presumably a permission o let will involve credt check etc and us disclosing we have another mortgage?

finally what are the implications FOR THE LANLORD of not having a permission to let?

many thanks

By not having permission to let, you are breaching the terms of your original loan agreement, in which you agreed to live at the property yourself. Letting is considered a higher risk to the lender's money, so they impose higher costs and other clauses to help cover that risk.

If you continue to let without consent, they could withdraw the loan and repossess. A lot of savvy tenants ask for written confirmation that LL's have permission before they will take a property, so they may suss you anyway.

Is your flat leasehold? If so, do you even have consent to let from the freeholder?

There are also many other obligations you are taking on in becoming a LL. If you are asking basic questions like what happens if you do not have CTL - then you obviously need to learn a lot more about letting before you go any further.

Read this post:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

and make sure you fully appreciate the legal requirements of letting first!

G_M

Yes they can refuse, but that does not mean they will. The key may be the expected rental income/mortgage payments ratio: £125%?

This will be more important than your salary/other mortgage etc.

Implications?
You're in breach of your mortgage agreement and they can redeem the mortgage/repossess if you refuse, or impose financially crippling penalties.Will they find out? Yes. I'm sure they require you to insure right? and they require to see the insurance? So what will they think when you switch to landlords insurance.......???
(and if you don't switch and keep your existing insurance, it will be invalid with tenants in there, so when they burn the place down....

franklee

tostaky wrote: »

finally what are the implications FOR THE LANLORD of not having a permission to let?

Possible problems in the event of an insurance claim?

Extract from ARLA:
http://www.arla.co.uk/information/insurance/buildings-insurance/

"Consent. It is essential that you advise and obtain consent to let your property from your mortgage lender, existing insurer and head lessee (for leasehold properties). Failure to obtain written consent from these parties may render your insurance void in the event of a claim. Sadly there have been many instances where buildings claims have been totally rejected because the insurer and or mortgage lender was not advised the property was let."

Also if you're using a good letting agent they should ask you about permission to let or their heads may be on the block should you get repossessed see here:

http://forums.moneysavingexpert.com/showpost.php?p=46767155&postcount=39

So that leaves you choosing a dodgy agent or lying to a clued up one which I guess is an implication if you wish to use an agent.

tostaky

thanks - we have a share of freehold.
i dont mind asking for a permission to let but im just concerned that we purposely got another flat for less than we could just so we could keep the first flat. i would be gutted if we dont get the permission to let and are asked to sell the flat...

so the cost of the mortgage will increase if we ask for permission to let?

tostaky

. If you are asking basic questions like what happens if you do not have CTL - then you obviously need to learn a lot more about letting before you go any further

.

which is exactly what i am doing here, no need to be patronising....

thegirlintheattic

tostaky wrote: »

so the cost of the mortgage will increase if we ask for permission to let?

You will be charged an admin fee. Most companies will then increase the interest on your mortgage, although some will keep it at the same level.

Are you also aware of the other costs that come from letting a house and your responsibilities?

Werdnal

tostaky wrote: »

.

which is exactly what i am doing here, no need to be patronising....

I was not being patronising - I was stating a fact and trying to warn you that CTL may be the tip of the iceberg when you are letting for the first time. Sadly, many newbie LLs blunder into it thinking it is easy - it is if you do your homework first, and understand exactly what YOU need to do to become a legal and reliable LL. There are posts here almost every day relating very sorry tales of how things have gone so badly wrong, and it often transpires that the LL knows little or nothing about what their legal obligations are, and the problems are a result of their own mistakes. Alarm bells instantly rang when you started asking about CTL, as if you are at the point of sorting a mortgage to let out a property, you should already have done this research by now!

If you think I am being patronising, wait until your get your first tenant, who totally susses that you are new and walks all over you. Tenants invariably know more about tenancy law than new LLs and can take advantage of that to run rings around you. Seasoned tenants can spot a new LL a mile off, so make sure your are confident in the knowledge that you are doing it right, otherwise your tenant will be running the show and not you!

Remember too, that you can only claim mortgage interest against the rental income when you declare it for tax.

I am sure there are LLs who do take a chance and let without consent, but there have also been posts here recently from tenants who have had mortgage reps knocking on their door telling them that the property is being repo'd - don't let that happen to yours!

G_M

Werdnal wrote: »

I.....

Remember too, that you can only claim mortgage interest against the rental income when you declare it for tax.

...

"What? You mean I have to pay tax? On the rent? But that's not fair as I'm already paying two lots of mortgage payments......!"