Would i be in trouble if - I got a FT buyer mortgage and rented out the property??

Bossyboots

thebrow2000 wrote:

Its always interesting to read the catty comment and their is alway some jealous over buy to let. Esp those ppl who believe a house should be there to live in and not just a money making scheme.

So in response to the questions.

1. I can afford the desposit but not 15%

2. As my company needs rooms for the workers its is a guaranteed rent. Now that is an opportunity to good to miss.

3. I plan to convert the garage to a small flat - Would this be enough to satisfy the bank. I only plan to stay maybe twice a week?

4. What are the tax impications? This would be my first house so surely nothing??

Thank you all for your views

Unless someone has deleted a post, I can't see any catty comments. I can see a forthright answer telling you the position and I always find it interesting when people ask for advice and then don't like it when someone points out the truth to them.

The fact is that if you complete your mortgage application on the basis of you buying a property to live in, but do not intend to live there then you are committing an offence. In fact, under the new legislation due to come in you have already committed the offence as the anomolies in the wording mean the offence is committed at the time it is conceived, even if not executed (whether it will go through in that form is another matter).

As for the insurance, no you will not be insured if you take out residential cover and then put in tenants.

prudryden

(1) INSURANCE: To be insured, the Insurance Company needs to know if it is rented. You have no option there.
(2) TAX: You will need to add the rental income to any other income on your tax forms. However, you will be able to deduct any expenses from the rental income that was necessary to initially fund the business and subsequent expenses to maintain the business. No option here either.
(3) Mortgage: This is a sticky one. A lot depends on how the application is worded. One way around the "so called" deception bit is to actually live in the flat for a short period of time, then move out and rent.

(A) The information on the application was then correct at the time of submitting.
(B) By subsequently renting because of changes in your life, you are suppossed to notify the lender in accordance with their Terms & Conditions. By not telling them, it would be a civil matter, not a criminal matter.
(C) The risk you take is that the lender finds out, perhaps by post being returned, and they ask for the back fees and higher interest for a buy to let mortgage. The worst case and most unlikely scenario is that they ask for the loan to be repaid in full.

Rick62

Lets be clear. If you knowingly make a false statement when applying for a mortgage then you are committing fraud and that is a criminal offence. Not catty, FACT. So if you apply for a residential mortgage when you apply knowing full well that you do not intend to live there you are committing fraud.

If you are living in a place and your circumstances change then you can apply for a consent to let, and most lenders give this with no hassle. I suspect that as more people use residential mortgages deliberately to get BTL properties the lenders may start to look more closely at this and it may become harder in the future.

Sarahsaver

Yes! Of course :rolleyes:

mountainofdebt

Now I always thought that if you applied for a mortgage you had to sign a statement confirming who was going to live in the property if that person was not on the mortgage but over 18? Now that would be fraud.

Slightly OT but how do mortgage companies know if you're a FTB, especially if you have no mortgage when you apply for it?

Madjock

if you have no mortgage i believe you are treated as a FTB.
And yes, it is mortgage fraud.
And why would you think you will have no tax liability?

tomstickland

Its always interesting to read the catty comment and their is alway some jealous over buy to let.

It's a bit odd that this a BTL and then you claim that you need to "get on the ladder".

Anyway, it's not jealousy, it's concern that what you are proposing isn't a good idea and involves risking money you don't have.

barnaby-bear

thebrow2000 wrote:

2. As my company needs rooms for the workers its is a guaranteed rent. Now that is an opportunity to good to miss.

Any tenancy agreement is void if the mortgage co. doesn't know about letting, so tenants can be evicted with no rights in 10days. If I was your tenant and mortgage co. post arrived indicating my tenancy was worth nothing I would consider doing the following:
a) shopping you to the mortgage company when I left
b) blackmailing you to ensure low rent and full deposit back
c) grassing you up to my and your manager if there was a work link, i.e. telling work you are dishonest and putting me on void tenancy

depends if you annoyed me and how much of a barrel I got you over, but you'd have to be very nice to me and do everything I wanted at work and as a landlord... then I may keep quiet but I'd probably still shop you when I left for disrespecting me enough to have no tenure and no insurance.

You'd have to be such a good little landlord at my beck and call... here boy here boy.... come fix this, buy the house this... putting tenants in and negating their rights is pretty scummy and tenants don't like finding out this has been done....

irnbru_2

Ivrytwr3 wrote:

a friend of mine has been doing this for about 6 years and neither the mortgage provider or taxman know about it and she hasn't been caught; yet.

The Tax Office is busy with self-assessment just now but if you phone them and leave a message, they'll catch up with her .........

Zeitgeist

You could of course live there and rent any spare rooms out, that would be a sensible compromise.