Subletting Shared Ownership Untill I can buy Other Half

Pension_Plan

Hello Everyone,

I currently live in a shared ownership property, an amazing opportunity has come my way that could secure my future but it would require me to be in breach of my Lease.

Basically my partner and I have come across a house closer to my work that we can just about afford (without selling the flat). I have a friend who is desperate to find a flat and to me it seems the most logical win - win situation is to rent out my flat, to my friend at an amount that can pay the rent and the mortgage. After about a year of saving and scraping and once my fiancee finds a job I think i could make a bid for the other half of the SO flat. With some planning and budgeting I recon I can make the flat break even (it wont make a profit).

For me this would be a dream come true as not only would I have a house, my friend would be saved from her own nightmare but I would effectively have secured myself a pension plan. At 22 I have worked bloody hard to get to this point and I think its a perfectly sane plan, the HA will get there money, my friend will have a flat and i will have a house.

However there are 2 main issues here.
1.) there is a clause in my lease that does not allow sub letting
2.) ethics

Ill start with the second point, some people will argue that I am denying someone else the same opportunity that I was fortunate to have (the SO) however there are currently 2 other SO flats in my block for sale and have been for over 6 months. Also if I was to sell at this point I would actually make a massive loss on the property I would at the very least like to hold onto it untill it would break even. So if i wasnt subletting / planning to buy the other half; It could easily sit empty for months if not years, which is of no use to anyone. Also if my friend decides they would like to buy the other 50% down the line, I would be happy to sell it to her.

Ok now back to the legality, like I said there is a clause that disallows subletting and when I have brought up the subject before its been an outwrite no. So what is the ramifications for breaking the lease? is it fines? court order? eviction?

If it is eviction and suing for loss of earnings then I would happily leave the property and hear their claim for loss of earnings, I will have made no profit and will have paid them there fair share.

Is there anything more severe? can they void the lease and I outright loose my 50%? is that possible?

I understand that what I am basically asking is what happens if I break the law. I also understand that some people may see this as un-ethical, however I honestly believe that everyone wins in my plan and no one would win in the alternate (believe me the house would stay empty). I plan on buying the other half in the future I just cannot get the loan for it at the moment. If you have an honest argument to contest that please do, however if you just want to bash me for trying to make my way in the world, that's not fair.

Thank you for your time, your thoughts and your knowledge,

-Kyle

hazyjo

Do you currently have a mortgage? Do you have a deposit for the other house?

And no, I don't think you should rent it out. Being a LL is not as easy as it sounds! Lots of responsibility, your mortgage provider would probably want to change it to a BTL or charge you a fee - and I doubt they'd agree if there's a clause saying you can't rent it out! You'd probably also find it would invalidate your insurance by renting it out - especially if you're not actually allowed to. If they can find a way to not pay, I'm sure they will. Would you be prepared to evict your friend if they could no longer pay the rent? Would you be able to cover two mortgages if it sat empty?

With only one income, would you even get two mortgages?

You're only 22 so why don't you just start paying into a pension plan?

Jx

poppysarah

Do you have neighbours who'll snitch on you?

shortchanged_2

Well yes it's unethical and it's wrong. If those are your contract terms then I'm afraid you should stick to them or suffer the consequences. Remember, YOU signed the contract accepting these terms.

Pension_Plan

hazyjo wrote: »

Do you currently have a mortgage? Do you have a deposit for the other house?

And no, I don't think you should rent it out. Being a LL is not as easy as it sounds! Lots of responsibility, your mortgage provider would probably want to change it to a BTL or charge you a fee - and I doubt they'd agree if there's a clause saying you can't rent it out! You'd probably also find it would invalidate your insurance by renting it out - especially if you're not actually allowed to. If they can find a way to not pay, I'm sure they will. Would you be prepared to evict your friend if they could no longer pay the rent? Would you be able to cover two mortgages if it sat empty?

With only one income, would you even get two mortgages?

You're only 22 so why don't you just start paying into a pension plan?

Jx

I have spoken to a mortgage broker, the logistics of it have all been approved. If my friend wanted to move on I would probably just sell. The insurance is an interesting point, I would have to check that, thank you. as for the eviction, I would be prepared...I think, I understand this is the one of the biggest risks but I would trust this person with my life so I am prepared to go out on a limb for her.

At the moment all I seem to hear lately is peoples pensions plans being worth nothing. I feel this way is a way I can be completly in control of my pension plan. Yes it may seem a little bit of a gamble but at least its my gamble not the banks, plus this way I get to help out a friend.

@poppysarah So far the neighbors dont seem like the snitching type, the others havent even met me yet. There is high chance that they would be completely oblivious to it. Particualarly as the guy next door has actually had a number of different lodgers. They have also admitted to being fine with other lease breaches.

@shortchanged Yes I did sign the contract, i am prepared to accept the consequences I would just like to know what they ACTUALLY are. The contract says what I shouldnt do, not what happens if break the contract. If the consequence is eviction so be it, as long as I dont loose the money I already invested into it.

I appreciate all the comments so far, I apologise if any comments come off as blunt, there are some statments an emoticon wont cover:D

mustrum_ridcully

What you're suggesting is unethical and in breach of the contract you have with the HA, my guess is you might choose not bother telling the mortgage company in case the HA may find out, what would you do about insurance normal insurance that the mortage company requires wouldn't be valid?

Would you like it if you had an unethical tenant who decided not to pay the rent and then treatened to report you to the HA and mortgage company (in order to hide your subletting mail would still have to go to the flat so they'll soon know the score)? Bet you wouldn't like that at all even though the tenant is just trying to make their way in the world.

Pension_Plan

mustrum_ridcully wrote: »

What you're suggesting is unethical and in breach of the contract you have with the HA, my guess is you might choose not bother telling the mortgage company in case the HA may find out, what would you do about insurance normal insurance that the mortage company requires wouldn't be valid?

Would you like it if you had an unethical tenant who decided not to pay the rent and then treatened to report you to the HA and mortgage company (in order to hide your subletting mail would still have to go to the flat so they'll soon know the score)? Bet you wouldn't like that at all even though the tenant is just trying to make their way in the world.

Again the tenant is a friend I trust, yes it still risky, and I dont plan on lying to them about it. There would be no lies told, the mortgage companies know the score. The mortgage company does not require insurance.

The only people that im scared of telling is the HA. What powers do they have, what would be the penalty if they found out?

hazyjo

Don't think it's always a case of 'trust' - what if the friend loses their job or has to quit/can't work for any reason?

Jx

Pension_Plan

hazyjo wrote: »

Don't think it's always a case of 'trust' - what if the friend loses their job or has to quit/can't work for any reason?

Jx

Very sensible point, although we havent discussed this with our friend yet we will add a clause to the contract. If she lost her job I would be willing to take a hit on the rent for 2 months, i am in the fortunate position of being able to freeze some payments that would allow me to account for this. In the case were it looked like it would be longer I would put the house up for sale, she could live in the house for free untill the house is sold and if she really up the creek after that point,we would have a spare bed at our new place. Like I say she is a good friend and we would be more then willing to.

Does anyone have any advice on the actualy consequences of doing this? If the HA decide to evict me, does that just mean I have to put my half up for sale imediatly?

-Thanks, Chris

System

Pension_Plan wrote: »

Very sensible point, although we havent discussed this with our friend yet we will add a clause to the contract.

Why bother? You are willing to ignore a clause in your contract so there is nothing stopping your friend doing the same and refusing to move out?

hazyjo

Think about why she might not be able to work - pregnancy, for example... would you want her and a baby in yours? What if she could no longer manage stairs for whatever reason? You just never know what's round the corner...

Jx