Bank charges for renting your flat.

JQ.

mdipltd wrote: »

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.

You understanding is incorrect - you only get tax relief on the interest element of the mortgage. If you are making capital repayments towards your mortgage then you will have to pay tax on that element, so whilst you may not see a profit each month, there is a tax liability.

mdipltd

The mortgage hasn't changed at all, they want £1,940 to allow me to let it to someone else. Back to the point of why the they charge 10x the amount of everyone else!?!

Tax liability, read again, "non profit". I have an accountant that runs my business at a cost of £4,000 a year, I know what I have to pay tax on and what I don't and if something crops up that I don't know about, I call my accountant. I would put a link up for you that will tell you all the legal info you need to know about tax liability as a landlord, but as I'm new to this forum I can't. You'll have to google it! And my partner works in lettings for one of the biggest letting agents in the country, I know the legal stuff.

BACK TO WHY SANTANDER CHARGE 10X THE AMOUNT OF EVERYONE ELSE? OR IS IT THAT NOBODY KNOWS? THAT'S WHAT I'VE ASKED ABOUT, NOTHING ELSE!

BitterAndTwisted

Santander are charging you because they can. They are accepting a risk which they did not agree to when you applied fro the mortgage. All lenders are different and santander do not have to justify to you or me about how they arrive at that high fee.

You didn't "have to" move out of your property: You chose to do so before you investigated properly all that you needed to. When you could have gone to another lender to get a better deal. Now it's too late. Pay it , convert to a Buy-To-Let mortgage or sell the property.

I dunno why you are demanding that a load of strangers on the internet justify a lender's decision. I understand fully why you don't like that decision but you are where you are and that's no-one's fault but your own, sadly.

Werdnal

mdipltd wrote: »

The mortgage hasn't changed at all, they want £1,940 to allow me to let it to someone else. Back to the point of why the they charge 10x the amount of everyone else!?!

Tax liability, read again, "non profit". I have an accountant that runs my business at a cost of £4,000 a year, I know what I have to pay tax on and what I don't and if something crops up that I don't know about, I call my accountant. I would put a link up for you that will tell you all the legal info you need to know about tax liability as a landlord, but as I'm new to this forum I can't. You'll have to google it! And my partner works in lettings for one of the biggest letting agents in the country, I know the legal stuff.

BACK TO WHY SANTANDER CHARGE 10X THE AMOUNT OF EVERYONE ELSE? OR IS IT THAT NOBODY KNOWS? THAT'S WHAT I'VE ASKED ABOUT, NOTHING ELSE!

Bascially lender can charge you what they like for the privilege of letting their property - after all if they loaned you the money to buy it, it is theirs until you pay them back.

As for ploughing the money back into the mortgage so you will not be making a profit on the let, you can only use the mortgage interest as an allowable expense, not the repayment amount. In fact, you should complete a tax return every year to account for your rental income even if you make a loss, as this loss can then be offset against any profit in future years.

I know you may be getting shirty with people here replying on other points, but there is a lot to take on board about becoming a LL. Firstly, you are giving sole occupancy of the most important and expensive asset in your life, to a complete stranger. You also need to comply with the laws surrounding letting and that is why many people here are advising you to ensure you know what you are getting into. I appreciate times are hard which is why you are taking this route, but having asked a very basic question of why your lender is charging such an amount to give you the chance to let the property, do you also understand what you are required to comply with as a LL. Do you have insurance, do you know how to vet and check tenants, draw up legally binding tenancy agreement, protect the tenant's deposit - and probably most importantly, serve legal notice and get your property back if and when you need to? There is a lot to learn and understanding why the lenders want to charge you this fee is just the start. Letting is a risk - the lenders know that, hence the money they want - but you need to mitigate the risks on you and your property and learning all you need to know is the only way to do it.

Don't take offense at people who are only trying to help you avoid any pitfalls and advise you for your own benefit how to get it right and make a successful job of this.

I would advise you to read the link in GM's post above, to make sure you are up to speed with everything.

Good luck!

JQ.

They are are charging you because they don't want your business. They want you to go elsewhere and get a Buy to Let mortgage, but for £2,000 it's worth them taking the risk. I don't know who told you you can't have a BTL mortgage, but they are wrong, was it your accountant? It may well be cheaper to swap to a BTL, so why not investigate that further.

You are still wrong about your tax liability.

mdipltd wrote: »

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.

That statement above is incorrect, you only get tax relief on the interest element of the mortgage and some of your costs. Any rent you use to pay down the capital on the mortgage is taxable. Ask your accountant.

People are only trying to help.

BitterAndTwisted

I don't think the OP wants any help: all they do seem to want is an answer from Santander. Who don't post on this forum as far as I know. I dunno why he doesn't just pick up the phone and damned-well asks them.

Anyway, I do hope this thread provides some useful information to other readers of this forum who might be considering the same thing. Clue: don't ask your mortgage-lender for Consent-To-Let before you have moved out and while you could get another product. Mind you, getting another residential mortgage and asking for Consent-To-Let five minutes later could get you into warmish water where enquiries about mortgage fraud could be involved.

tbs624

mdipltd wrote: »

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".

It does not "turn into" CTL - you seek the lender's permission as the standard terms of a residential mortgage do not permit the mortgagee to rent the property out.

mdipltd wrote: »

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!

You are asking them to agree to accept a greater risk on that property on which you secured funds so that you personally could live there.

Have a look here:https://forums.moneysavingexpert.com/discussion/comment/49363733#Comment_49363733 and you can compare it with what the Halifax and others do.

G_M

Why is it when I get a quote to have my car fixed one garage wants £100 and another wants £200?
Why does a Sony TV cost £300 from one store but £450 at another?

You asked why Santander want this money to grant you CTL? Because that's what their business plan is! Another bank might charge less. Yet another might refuse outright!

You've been given the answer several times, explained in different ways so instead of throwing your toys out of the pram because it's not the answer you want, show some gratitude!

Oh, and yes, some people have gone further to give you advice which was not specifically what you asked (tax etc) but which may be useful to you (esp given your obvious gaps in understanding), so again, show some gratitude!

kingstreet

Is it possible this amount is made up of the fee mentioned and a sum needed to reduce the mortgage down to a level where the loan to value would put the proposition into a frame the lender is prepared to accept for a consent to let?

What's the outstanding mortgage balance and property value?

OP - what is the lender saying about this sum of £1,940? Is there a breakdown? Is it in writing? Is it A&L or Abbey?

gld73

OP - no advice, but you have my sympathy. I'm in the same boat - have to move with work, but as I may have to move back in a couple of years, I want to keep the house. I'd spoken to Santander on the phone and had spoken to and read about other people who'd got permission to let from them, and was therefore expecting a £250 fee .... but I think things have changed recently and they must have changed their policy, as the letter I received was similar to yours.

I thought it was just me being picked on (!!), but maybe they've upped the charge for everyone now. Nothing we can do I suspect other than pay out the small fortune, or risk letting without permission.