What actually happens if you rent out your property and don't tell the lender?

MissMoneypenny

DVardysShadow wrote: »

You are painting a somewhat too black picture here, True enough, the more savvy tenants will look for proof. When they go away disappointed, there will be the less than blue chip tenants who will take a punt on this. Depends whether you want less than blue chip tenants.

I think you are mistaking relief for disappointment. Unless you are referring to your own dissapointment at getting caught out and the fear that they might report you to HMRC and your mortgage lender?

The tenants will be pleased to walk away from a property where a landlord didn't have consent to let.

DVardysShadow

MissMoneypenny wrote: »

I think you are mistaking relief for disappointment. Unless you are referring to your own dissapointment at getting caught out and the fear that they might report you to HMRC and your mortgage lender?

The tenants will be pleased to walk away from a property where a landlord didn't have consent to let.

You are a bit confused here. I have never proposed to do BTL on a resi mortgage. True enough I am trying to scale back the bolder claims as to the dire consequences to something more realistic.

I tend to agree with OP that the CPS might not prosecute - my own view is that this is more a civil matter.

But overall, I am against letting on a resi mortgage because it requires contracting to provide a home to a tenant, knowing full well that if you default on the mortgage, you are going to put someone out of their home.

Yorkie1

DVardysShadow wrote: »

Perhaps a moment to reflect on this. Mortgage fraud is generally reckoned to be taking out a loan on a property and disappearing with the money, the pecuniary advantage being the amount of the whole mortgage.

In this particular case, the pecuniary advantage is the difference between residential and BTL rates on a mortgage. So, I don't think we are looking at a year for £k100. But beyond this, I would invite OP to consider how much they are defrauding and apply the sentencing guidelines accordingly

I'm pretty sure you're not correct here. Obtaining a pecuniary advantage by deception was revoked 6 years ago.

The offence of fraud is complete when a person dishonestly makes a false representation, knowing it is /might be untrue o might be misleading, intending to make a gain for self/other or to cause loss to another / expose another to a risk of loss.

The focus of the offence is entirely the conduct of the offender - i.e. the false representation with the requisite intent.

The gain is not defined by reference to what he might otherwise have lawfully been able to obtain if he'd told the truth. The gain or risk of loss relates to the value of the mortgage itself.

In fact, there is no necessity in law to prove any actual gain or loss, so the relative advantage is irrelevant in any event.

That only comes into play, potentially, when considering POCA issues.

Thrugelmir

jjlandlord wrote: »

Still, I find it fascinating that every time that the subject of consent to let from lender pops up so many people rise to the defense of the banks' interests.

As a major shareholder in 2 of the UK's major banks I have a vested interest.

Why should I subsidise someone who thinks that we still live in the realms of the Wild West.

FraudBuster

Please do not feed the Troll.

DVardysShadow

Yorkie1 wrote: »

I'm pretty sure you're not correct here. Obtaining a pecuniary advantage by deception was revoked 6 years ago. [1]

The offence of fraud is complete when a person dishonestly makes a false representation, knowing it is /might be untrue o might be misleading, intending to make a gain for self/other or to cause loss to another / expose another to a risk of loss.

The focus of the offence is entirely the conduct of the offender - i.e. the false representation with the requisite intent. [2]

The gain is not defined by reference to what he might otherwise have lawfully been able to obtain if he'd told the truth. The gain or risk of loss relates to the value of the mortgage itself.

In fact, there is no necessity in law to prove any actual gain or loss, so the relative advantage is irrelevant in any event. [3]


That only comes into play, potentially, when considering POCA issues.

[1] I am not referring to description of the offence itself. I am using the term 'pecuniary advantage' as a description of the amount swindled.

[2] On OPs description, the intent is to benefit by the difference in monthly payments between BTL and resi.

[3] I really cannot see this. There is no genuine risk of a loss of the equity lent by the mortgage lender, there is a genuine property secured by a genuine mortgage - the sentencing guidelines may be loosely written, but this is plainly a very different crime from giving a false security and running away with the whole of the loan.

If you attempt to tar OP with the same brush as running off with a loan without leaving a security which the lender can claim on, the likely result will be that OP gets 2 months suspended or something trivial and all the fraudsters who run away with the whole of the loan will appeal and get theirs reduced to 2 months suspended too.

I don't think it does society any favours to equate [run away with the funds] mortgage fraud with [pocket £150/month by taking on tenants on a resi mortgage] mortgage fraud.

It is a bit like criminal penalties for an over Laden Bin, equating with the misdemeanours of Bin Laden

Kynthia

Not getting consent to let when you decide to move out of your home is a breach of your contract and could result in your mortgage company increasing your interest rate or calling in loan amount with immediate effect.

Applying for a residential mortgage when you intend to let out the property is fraud and i believe this is illegal. You can end up with a criminal record.

I'm not an expert so you should probably find out for sure before you do this.

Yorkie1

DVS, I really don't often disagree with you but I'm afraid you aren't right in your analysis of the elements of the offence of Fraud, contrary to s.2 Fraud Act.

If you don't believe me about the legal elements of the offence, perhaps you'll believe the legal guidance of the Crown Prosecution Service.

http://www.cps.gov.uk/legal/d_to_g/fraud_act/#a22

Whether you can see it or not, there is no requirement in law for any actual gain or loss to have occurred for the s.2 Fraud Act offence. The intention to make a gain, or expose another to a risk of loss, is sufficient.

The OP has expressed a hypothetical intention to make a deliberately false representation on a mortgage application with intention to make a gain for himself. That is sufficient for the offence to be established in law.

Now, whether it would be in the public interest for an offence to be prosecuted, and the view to be taken by the court at any sentence, are different matters. But they should not be confused with whether the offence is in law established, which it is.

The OP asked what the worst case scenario might be, and it includes prosecution for fraud.

DVardysShadow

Yorkie1 wrote: »

DVS, I really don't often disagree with you but I'm afraid you aren't right in your analysis of the elements of the offence of Fraud, contrary to s.2 Fraud Act.

If you don't believe me about the legal elements of the offence, perhaps you'll believe the legal guidance of the Crown Prosecution Service.

http://www.cps.gov.uk/legal/d_to_g/fraud_act/#a22

Whether you can see it or not, there is no requirement in law for any actual gain or loss to have occurred for the s.2 Fraud Act offence. The intention to make a gain, or expose another to a risk of loss, is sufficient.

The OP has expressed a hypothetical intention to make a deliberately false representation on a mortgage application with intention to make a gain for himself. That is sufficient for the offence to be established in law.

Now, whether it would be in the public interest for an offence to be prosecuted, and the view to be taken by the court at any sentence, are different matters. But they should not be confused with whether the offence is in law established, which it is.

The OP asked what the worst case scenario might be, and it includes prosecution for fraud.

You really are missing the point big time. You are the one who is mistaken in the analysis of the proposed offence. I am not arguing that it would not be fraud. I am arguing that it is not a fraud which exposes the lender to the same losses as true run away with the whole loan mortgage fraud.

Your link http://sentencingcouncil.judiciary.gov.uk/docs/web_sentencing_for_fraud_statutory_offences.pdf go to page 27. What the OP is proposing is in an entirely different column to true run away with the funds mortgage fraud. OK, by posting here, he is a few rows higher up, but still not in the same column. This is because the pecuniary advantage he is extracting is the difference in rates. The lender is not at risk of a total loss, they would be properly secured. It is a different crime.

Let me remind you. You said

Yorkie1 wrote: »

... For a fraudulent single mortgage application of over £100K from the outset you're looking at over 1 year's custody.

You are misapplying the sentencing guidelines. You are totally in the wrong column.

Now, just to repeat, I don't think that what OP is proposing is right. But what I am picking at is you and others overdramatising how wrong it is.

Yorkie1

I did think you were saying you didn't think it was fraud, so apologies if I misunderstood that aspect of your post.

However I think we are nevertheless going to have to disagree about the interpretation of "gain" and "loss" in the Act and guidelines.

The OP is intending to gain the entire mortgage amount from the lender. The lender is at risk of losing the entire mortgage amount - you cannot base a charge on quantifying what might happen in the future, depending on negative equity / repayments / select a random residential rate versus BTL rate / complete loss of the house which might not be insured etc.