Crazy Halifax 'consent to lease' rates - please help!

MissMoneypenny

silvercar wrote: »

CTL I find a total red herring - far better for a tenant to see that the mortgage is paid to date on a short term let.

That could quickly go into arrears if the mortgage lender finds they rented out the property and impose an immediate interest rate rise and all back charges.

Apart from all the techie ways they now have to trace those who let without consent; some landlords got caught out when banks merge or take over other banks mortgages and addreses don't match. The Lloyds/Halifax joining caused a few letters to go out, telling the borrower that they suspected they were renting out their property without consent.

In this dire economic situation of bailouts, some banks are being forced to sell off some of their mortgages. BoI had to been bailed out and had loan conditions put on that they have to sell some of their mortgages. Nationwide has taken over some of these and BoI still has more to get rid of - but to which banks and will those names and addresses match?;)

silvercar wrote: »

What worries me more than anything for new landlords is that a high percentage are letting out their property because they can't afford to live there. If they can't afford to live there, can they afford to maintain the property as well as the extra costs of being a landlord like GSC, insurance etc. ? In a lot of cases I suspect not.

That worries me too.

franklee

silvercar wrote: »

CTL I find a total red herring - far better for a tenant to see that the mortgage is paid to date on a short term let.

What worries me more than anything for new landlords is that a high percentage are letting out their property because they can't afford to live there. If they can't afford to live there, can they afford to maintain the property as well as the extra costs of being a landlord like GSC, insurance etc. ? In a lot of cases I suspect not.

It would be great to see that the mortgage is paid to date to but in the real world is it acceptable for a tenant to ask that? When I suggested it early on in the consent to let thread I got jumped on by landlords (including you IIRC) saying that's none of the tenant's business. I believe you wrote it would be an invasion of the LL's privacy and that you would not show a tenant statements even though I suggested the landlord could show statements with appropriate bits blacked out. Therefore I'm at a loss as to how a tenant could see that the mortgage is paid to date but if you have a suggestion how it could be done then please post it.

Asking for recent consent to let is a more palatable way of achieving the same thing. It has the added bonus of the tenant knowing he won't face the uncertainty of having a fixed term that's binding on him but not the lender which causes the tenant uncertainty of when his liability to pay rent will end.

Such a tenant with a long time left in a fixed term who gets wind of an approaching repossession can't secure another property as the repossession may be staved off at the last minute leaving the tenant liable to pay two lots of rent. So he has to sit and wait for the hearing and then hope he will be awarded the two months to move during which time he gets little information on what's happening with no one to release him from the tenancy.

Moving home is meant to be one of the most stressful tings we do yet somehow so many landlords forget this. Moving is bad enough without going through being kept in the dark while the landlord is repossessed. I'm amazed you can't see the uncertainty and logistics of this are far more stressful than a tenant being given proper notice under the tenancy agreement so the tenant can go out with certainty to find a new home knowing up front what his dates are and when his liability to pay the rent is going to end.

Of course the new act has helped close the gap but again I think you were with the landlords (on the sticky thread) saying consent to let didn't matter before that, which obviously it did or the law change would not have been required. It's a shame the act didn't make the tenancy binding on the lender but as aways with these things there were compromises.

I also take the view that if the LL can't afford consent to let then can he afford the things you list like to maintain the property? I doubt such a LL can or at least I think they are being naive about the true costs of running a letting business. I'm not at all surprised the lenders decline consent to the nice sounding "I'm not in it to make money types" as I can see them getting into financial difficulties when they go ahead in spite of the lender. Why would I want to rely on someone like that to provide my home?

That said I do agree that lenders should do more to help themselves over this, maybe by having standard letters they are willing to send out on request from prospective tenants saying if they give consent to let or not. Queue data protection wails ...

silvercar

When I suggested it early on in the consent to let thread I got jumped on by landlords (including you IIRC) saying that's none of the tenant's business. I believe you wrote it would be an invasion of the LL's privacy and that you would not show a tenant statements even though I suggested the landlord could show statements with appropriate bits blacked out. Therefore I'm at a loss as to how a tenant could see that the mortgage is paid to date but if you have a suggestion how it could be done then please post it.

IIRC I said that lenders should issue a standard letter on request of the borrower to say that the borrower was up to date with their mortgage.

What happens where a tenant is in situ and CTL expires and the tenant has no intention of leaving and the tenancy (possibly after a renewal) still has months to run?

I also take the view that if the LL can't afford consent to let then can he afford the things you list like to maintain the property?

Where a lender has hiked the price of the mortgage in return for CTL, the landlord then has less money to spend on maintenance etc not more. So telling a tenant that all will be fine with CTL is misleading. Far better to say that finding out that a landlord is up to date with his mortgage is important. I don't see anything wrong with showing a mortgage statement with private info blocked out.

MissMoneypenny

silvercar wrote: »

What happens where a tenant is in situ and CTL expires

The Consent to Let letter will have an end date. Tenants will need to see this before they rent the property.

silvercar wrote: »

Where a lender has hiked the price of the mortgage in return for CTL, the landlord then has less money to spend on maintenance etc not more.

This is why landords should realise they have a business and that they need a business plan. Business rates and mainenance cost etc, should be reflected in their plan. The lenders rates are "hiked" as this reflects the business rates. A tenanted house is a higher risk of default as borrowers will be more likely to default on this mortgage when in financail trouble, as they roof isn't over their head.

silvercar wrote: »

So telling a tenant that all will be fine with CTL is misleading.

Franklee has already explained that: the new laws don't go far enough to protect those people on a fixed tenancy where the landlord has failed to get consent to let.

franklee

silvercar wrote: »

IIRC I said that lenders should issue a standard letter on request of the borrower to say that the borrower was up to date with their mortgage.

A solution that revolves around getting something lenders don't supply isn't of much practical use although I agree it would be better if they did.

silvercar wrote: »

What happens where a tenant is in situ and CTL expires and the tenant has no intention of leaving and the tenancy (possibly after a renewal) still has months to run?

A renewal or follow on periodic tenancy is still the same tenancy. I think if a tenancy is binding on the lender it's binding. I've not heard of anything that makes a tenancy non-binding half way through so if the lender wishes to withdraw consent the landlord would presumably evict the tenant as per the tenancy agreement, probably by a section 21 notice. (But then a section 21 notice is par for the course for an AST although it does say to me best avoid accidental landlords as they are more likely to evict good tenants than the long term landlord). Or if the lender repossesses the tenant would get notice as per the tenancy agreement, maybe Section 8 ground 2 or Section 21.

Contrast that with what happens when the tenancy isn't binding on the lender and the tenant applies for the two month notice, uses that time to secure another property and then the repossession is staved off. If consent to let doesn't matter perhaps you can explain how a tenant should deal with avoiding being liable for rent on the old place as well as the new for what may be several months.

silvercar wrote: »

Where a lender has hiked the price of the mortgage in return for CTL, the landlord then has less money to spend on maintenance etc not more.

That's already covered in a post above:

MissMoneypenny wrote: »

That could quickly go into arrears if the mortgage lender finds they rented out the property and impose an immediate interest rate rise and all back charges.

silvercar wrote: »

So telling a tenant that all will be fine with CTL is misleading.

A plus for consent to let, or having a proper BTL mortgage, is that the tenant knows the let covers it's costs by meeting the lenders criteria like "the rental income is sufficient to cover 120% of the mortgage" and "The loan to value of the mortgage does not exceed 70%". These are both indicators of a viable business and that gives the best chance of a stable home for the tenant.

Who wants the security of their home based on the lender not finding out it's let? The point being that once a tenant is installed the landlord can't just hike the rent till the end of the fixed term so how does he cover the shortfall caused by extra charges and avoid slipping into arrears? Much better to have a landlord with a sound financial plan from the outset than one who is suddenly going to have to up the rent because the lender has upped the cost of the mortgage on discovering the let.

silvercar wrote: »

Far better to say that finding out that a landlord is up to date with his mortgage is important. I don't see anything wrong with showing a mortgage statement with private info blocked out.

In that case I hope to see you recommending tenants ask for this. In reality I don't think it'd go down too well with the landlord. Even so it isn't a replacement to asking for consent to let but an addition.

MissMoneypenny

franklee wrote: »

That said I do agree that lenders should do more to help themselves over this, maybe by having standard letters they are willing to send out on request from prospective tenants saying if they give consent to let or not. Queue data protection wails ...

Perhaps they should do what Microsoft did when they ran their "Shop a friend for Christmas" campaign and offered £100 to people who reported those who used pirated microsoft software.

I wonder if mortgage lenders have an online suggestion box?:D

franklee

MissMoneypenny wrote: »

Perhaps they should do what Microsoft did when they ran their "Shop a friend for Christmas" campaign and offered £100 to people who reported those who used pirated microsoft software.

I wonder if mortgage lenders have an online suggestion box?:D

It could catch on

Thing is during the boom no one cared as rising house prices bailed everyone out. Things are different now and everyone wants to cover their backs as there is less easy money to be made and plenty to be lost. It seems some borrowers haven't quite woken up to that yet. I have been astounded by some recent posts of people "not in it for the money" wanting to let out with tiny margins and little equity, especially to friends, and wailing they can't get consent to let. Yet if that was their own tens of thousands being treated recklessly I think they would get the point. I suppose chances are they will go ahead anyway. Then we will have some more harrowing my landlord is getting repossessed and no one will tell me anything threads

nollag2006

JB613 wrote: »

What on earth is a "nollag sockie"?!?!

I don't know what you are implying. Yes I am a new poster and I have come on here seeking some advice. I do however take offence to you spreading mis-information about the police and law. It is not good for PR by suggesting that good people could and would be criminalised and in the most serious of ways ie Crown Court for trying to do the best in a bad situation.

This site is about consumers trying to get the best deals, and not being ripped off by businesses or having to suffer poor customer service.

I am going through a similar time to some of these posters and it is worrying enough trying to find a suitable solution to your problem, without matters being made worse by being told you will become a criminal.

Brit1234 regularly throws out such taunts against any one who disagrees with his searing wit and insight.

Seemingly I have approximately 50 pseudo accounts (or "sockies") set up here just to torment Brit1234.

I can assure you that I don't.

If you or anyone else face these false allegations, simply report the matter to the moderators. If enough posters do it, we could see some action against him.

It really is a shame that a serving police officer is happy to go around making such allegations

Ponzi

This is an interesting conundrum for a lender isn't it? In a round-about way, you can blame the FSA and something called Basel II Capital Adequacy rules for the Halifax policy. The Basel rules stipulate banks must put more capital (ie hold more cash in case borrowers dont pay back) aside generally these days (called their tier 1 capital ratio) and they are forced to price their lending according to the risks associated with it....buy-to-lt being a higher risk product.

That said, some banks (admittedly those that haven't suffered massive fraud and/or govt bailout like the spectacularly blase Halifax of the 2004-2008 era) will allow a consent to let with little or no bother.

Oh, and mortgage customers are to blame too... If all those people hadn't inflated their income one their mortgage application forms, the Halifax etc may not have lent money on all those mortgages that ended up going bad ....in short everyone is to blame!

But hey, back to the Halifax ctl conundrum, I'm just gonna have to ring em up and ask - I fully expect a rate hike and a request for about £25k to bring the "loan to value" ratio to a more reasonable level... Whether or not I have £25k is another matter...!

kingstreet

It may be useful to know Halifax will not insist on the letting product change while you are "in a deal" but only while on SVR.

If you organise a product transfer first, you can get a lower rate/no fee alternative before you request consent to let, hence deferring (perhaps indefinitely on a short-term consent) the need to pay the higher rate and fee.

For example, if the current letting product is 5.69% fixed with £1,499 fee as outlined by the OP, the current product transfer alternative is a fix for two years ranging from 3.49% (60% LTV) to 4.49% (90% LTV) with no arrangement fee.

The product transfer has to be done before the CTL request is made.