Renting out my apartment

SaverEmma

Myself and my boyfriend (both mid 20's) seperately bought apartments before we started seeing each other seriously - 18 months on and we seem to spend all of our time together so are thinking of moving in together. Obviously its seems like a bit of a waste of money to just leave one place lying empty so we're considering renting one of the places out.

HOWEVER! We both bought under first time buyer schemes - I am on homebuy (so govt owns 30% of my property) and he did something similar but directly through baratts - this seems to make everything a lot more complicated. I am with the halifax and the website states that I have to have 75% LTV to use a buy-to-let mortgage - eek!

Does anyone know if there is a way around this? Neither of us seem to have enough equity in our properties to take on a buy to let mortgage but its seems ridiculous that as a result of that we have to pay out for two mortgages while only living in one place. Any ideas gratefully received!

carslet

i know people that have just rented it out without telling the bank and done it for a couple of years, but it is risky i hear i dont know the consequences if you get caught though. maybe someone on here will know if you want to take the risk, i dont think i would tough, i would be the one who got caught

kingstreet

SaverEmma wrote: »

HOWEVER! We both bought under first time buyer schemes - I am on homebuy (so govt owns 30% of my property) and he did something similar but directly through baratts - this seems to make everything a lot more complicated. I am with the halifax and the website states that I have to have 75% LTV to use a buy-to-let mortgage - eek!

Does anyone know if there is a way around this? Neither of us seem to have enough equity in our properties to take on a buy to let mortgage but its seems ridiculous that as a result of that we have to pay out for two mortgages while only living in one place. Any ideas gratefully received!

You appear to be describing shared equity, but then say the Government/Barratts own part of your properties.

Can you clarify what you have, please. Shared equity, the Government or developer takes a second charge over a portion of your property but you "own" 100% of it on day one.

Shared ownership means you only purchase a portion of it, perhaps 50%, or 75%, with a rent being paid to the owner of the bit you don't own.

How you approach your issue depends on what you actually have. Please clarify.

Antnshell

Hi I am also in a simlar predicament however mine is shared ownership therefore in my lease it is stipulated that you cant rent it out, although i would like too...... not worth selling either as in negative equity .......... so kind of stuck!!!

rentergirl

Shared equity is a very idea, and the limits on renting must be challenged, probably in the courts.

kingstreet

rentergirl wrote: »

Shared equity is a very idea, and the limits on renting must be challenged, probably in the courts.

Would you be kind enough to clarify what you mean by this...?

19lottie82

It is limiting but the idea behind shared equity is to help people buy their own homes that couldn't usually manage it. Not to help people buy their own homes, then rent them out.

Not that this means I don't sympathise with the OP. In an ideal world they would be able to sell the property and help someone else get on the housing ladder.

OP, Is this not an option, or are you both in negative equity?

kingstreet

Antnshell wrote: »

Hi I am also in a simlar predicament however mine is shared ownership therefore in my lease it is stipulated that you cant rent it out, although i would like too...... not worth selling either as in negative equity .......... so kind of stuck!!!

That's why I'm asking for clarification for how these properties were purchased. Shared equity is a freehold* purchase and only the lender's consent to let will be required.

If they are shared ownership, as you say, the permission of the HA will be required in addition to that of the lender and that is often not forthcoming. The lease may specifically prohibit sub-letting in the worst case scenario.

*I've just noticed the OP's properties are both flats, so they will be leasehold and require the ability to sublet in the lease, possibly plus freeholder consent too.

19lottie82

kingstreet wrote: »

Would you be kind enough to clarify what you mean by this...?

Who knows, rentergirl is forever coming out with strange statements and invalid advice.....

Werdnal

19lottie82 wrote: »

Who knows, rentergirl is forever coming out with strange statements and invalid advice.....

and very rarely comes back to clarify things, or give any substantiated proof of her wild allegations and odd comments!


OP, as you (or your boyfriend) no longer need one of the properties, would it not be better to sell? Do you want to become a LL? Do you know what it entails? Do you understand the costs and risks involved? Is your apartment leasehold - if so, have you checked the lease to see if you can let it? Do you want to have to comply with gas safety regs, LL insurance, deposit protection laws, self-assessment tax returns, getting calls at 2.00am reporting a burst pipe or broken boiler, evicting tenants who stop paying ... all goes with the territory!

I would challenge the morality of keeping a property that you have secured financial assistance to buy, to use it as a rent generating opportunity. These schemes are intended to help people who would not normally afford their own property to buy somewhere. I appreciate your circumstances have changed, but I think you should go over your purchase agreement with a fine tooth comb, as there may be a restriction on letting - and if there isn't, I am afraid that in my opinion there should be!

SaverEmma

Thanks for all the speedy replies!

To clarify, they are both shared equity - one with government support (with clauses preventing subletting) and one which is builder subsidised (so perhaps less of a moral issue in letting this one out - also the legal clauses seem loser from what I can understand).

I reply to the why not selling, its 2 things really - one being that we probably are both in negative equity (or just breaking even) and the other is that although I hope this relationship is for life, I still dont feel ready to completely merge finances - this would allow us to retain our own property but share day to day finances so a midway point.

In theory, I had thought about buying our the 30% share if I had to but then this seems to cause issues with renting it out.