Bank charges for renting your flat.

mdipltd

I've had to move out of my flat that I've lived in for 4 years and had a mortgage with santander for that period into a bigger place that I'm renting with my partner. I was told over the phone by a santander employee that it would cost an administration fee of up to £250 for permission to rent.

Anyway, I went through the process of paperwork and all that and now they've replied saying yes I can rent out my property if I pay them £1,940.00.

This can't be right, so I was wondering if anyone had any advice that could help me out.

Mark

BitterAndTwisted

For what length of time will this fee allow you to let the property? Nearly two grand could be cheaper than converting to a buy-to-let mortgage. Residential mortgage-lenders are not necessarily in the business of providing funds for people to go into business. Be aware that this arrangement is likely to be temporary and the lender could believe that they have you over a barrel. Which they do.

mdipltd

I know they do. I've been advised that a "buy to let" doesn't apply as I didn't buy to let and have lived there for four years, so it turns into a "permission to let". I just feel as if I'm being totally ripped off as I'm not going into business, not buying somewhere else and not asking them to provide me with funds. And taking into account other mortgage lenders fees or lack of for the service I require, it seems like daylight robbery!

DannyboyMidlands

Erm but you are going into business and they did provide the funds.

BitterAndTwisted

A buy-to-let mortgage is your only solition if you're not happy paying their fee. If their limit is only 12 or 24 months then you will either have to sell or find another lender who will offer you a BTL mortgage.

And yes, in effect you are going into business, they have lent you the funds for a purpose other than the one you agreed to at the outset.

Don't forget that any rent you receive will also be subject to income-tax. Is it looking like quite as good as a nice little earner now?

geoffky

Your new business is now being a landlord and All the legal complications that come with it.
If you think you can get away doing this half-heartedly think again because you are about to have a major impact on someone's life as you are legally bound to follows all the rules to the letter...I hope you know what you are doing as you owe it to the person who rents from you..

mdipltd

I'm just trying to get through this recession and no I'm not making any profit. If I understand the law correctly, I pay tax on profit! Adding to that, if you pay all monies received into the mortgage you aren't making any profit, so no profit, no tax to be paid.

Looking at the replies so far, it looks as if the point that santander want £2,000 and other banks charge as little as free or an admin fee up to £250 has been missed.

I was hoping for some relevant advice as to why santander were charging 10x the other banks fees and if there was anything I could do about it, especially as this site is called "Money saving expert".

G_M

mdipltd wrote: »

Anyway, I went through the process of paperwork and all that and now they've replied saying yes I can rent out my property if I pay them £1,940.00.

This can't be right, so I was wondering if anyone had any advice that could help me out.

Mark

Why can't it be right? If that is the bank's policy, or fee, for taking on the increased risk of lending on a business as opposed to a residential customer you have a choice: accept their offer..... or not.

Take a look at this post for more help.

NeverAgain_2

Quoting the OP: "I went through the process of paperwork and all that and now they've replied saying yes I can rent out my property if I pay them £1,940.00."

It's not clear what, if anything much, the lender has done.

Is it possible the lender has changed the mortgage to buy-to-let, and the £1,940.00 is the fees for doing so?

Soot2006

Also,

please read up on tax liability (before you enter this venture).

00ec25

mdipltd wrote: »

If I understand the law correctly, I pay tax on profit! Adding to that, if you pay all monies received into the mortgage you aren't making any profit, so no profit, no tax to be paid.

your understanding is fundamentally wrong - research the rules about allowable expenses - hint : interest only

mdipltd wrote: »

I'm just trying to get through this recession and no I'm not making any profit.

so what is your beef? You are getting through the recession by going into the rental business. Santander is in the business of lending money on residential property, they do not like rental property as they have seen what that did to those banks who were in that market so Santander is also trying to get thru the recession by getting a premuim on products it regards as risky

mdipltd wrote: »

Looking at the replies so far, it looks as if the point that santander want £2,000 and other banks charge as little as free or an admin fee up to £250 has been missed. I was hoping for some relevant advice as to why santander were charging 10x the other banks fees and if there was anything I could do about it, especially as this site is called "Money saving expert".

It has not been missed but the fact is they can charge what they like ...
If you do not like their offer then go elsewhere as there is nothing you can do about it. When you took a residential mortgage I bet you did not read the small print about the rates they charge for letting out otherwise you might not have chosen Santander - the wise money saver evaluates the total cost not just the headline rate .
money savers shop around - so go get some other quotes...