Consent to Let or Let without Consent???

d_cross

Hi,

We're trying to relocate but aren't in a position to sell our house so we are looking to rent it out. We've had a few letting agents round and the rental should just about cover the mortgage, which is great.

But I've just spoken to our mortgage company and they changed the rules at the end of last year (typical!!!) whereby we need to port to a new buy to let product (as we are deriving "an income" from the rental) which will bump the interest rate up from the SVR (~2.5%) to over 6%. Now we would be ok to cover the payments but it will make a severe dint in our budget as it equates to about £400.

My question is do I have to notify my mortgage co and go through the consent to let route or can I keep quiet and keep the mortgage payments the same.

Any views? I'm going to have a look around at the market to see what's available but I'm not hopeful!

Thanks,
d

snozberry

if you are going to rent your house out then you need to do things properly and seek consent to let from your mortgage provider. You really don't want to, a few months down the line, get found out.

Are you definately sure that your provider told you that you need a 'buy to let' mortgage. I am only asking because I will be needing to rent my house as well. My mortgage provider told me that BTL's are only needed if you buy a house with the sole intention of renting it out. Ring back and make sure. Mind you it could be that mortgage providers have their own set of rules ...

Ne5555

if the tenant apply for council tax benefit and housing benefit ,council asks for mortgage company consent on that one and I am afraid you had to get consent.

I had a friend who let his home and tenant applied for ct and hb and council asked for consent, he asked mortgage company to give consent, mortgage company asked freeholder to give consent(leasehold property for 1000 years )
it took nearly 3 months to find the freeholder and freeholder gave consent,back to mortgage company ,after 6-8 months my friend fedup and now let to some foreign people who dont claim anything.

Simon_gloster

d_cross wrote: »

Hi,

We're trying to relocate but aren't in a position to sell our house so we are looking to rent it out. We've had a few letting agents round and the rental should just about cover the mortgage, which is great.

But I've just spoken to our mortgage company and they changed the rules at the end of last year (typical!!!) whereby we need to port to a new buy to let product (as we are deriving "an income" from the rental) which will bump the interest rate up from the SVR (~2.5%) to over 6%. Now we would be ok to cover the payments but it will make a severe dint in our budget as it equates to about £400.

My question is do I have to notify my mortgage co and go through the consent to let route or can I keep quiet and keep the mortgage payments the same.

Any views? I'm going to have a look around at the market to see what's available but I'm not hopeful!

Thanks,
d

Sounds as though you have gone through to C&G or Nationwide.

If your on their SVR, you have to go onto onesnt to Lease Products. YOur insurances for a start will be invalidated as it's for a residential property. If the tenants ruin the place, you will have to repai it yourself. also, should you inform the insurer, they will contact the lender.

The lender will also have an idea now...as you have made an enquiry. When you contact to change your correspodnece address, this will trigger them to to some form of action. I have know personally a lender send a a letter to 'the occupier' in the form of a questionairre about who they are etc and to send it back.

The result was a loaded interest rate - backdated.

In a technicality, it;s breaking the term and conditions of the mortgage. also if it is C&G or Nationwide, don't forget they have branches in that area.....and people can monitor upon request.

LBG I have been told are very very tough on Consent to Lease and unauthorised tenancies. You may get away with it...but for how long. You'll find playing by their roles will in the long term cause you less stess and cash.

holly_hobby

If you proceed to let without your lenders consent, you will be in breach of your mortgage terms and conditions - and far from backdating and adding of loaded interest, they do have the authority to insist upon the mge being fully redeemed with them (ie - they effectively kick you off their books, to go and find an alternative BTL provider - which you will only be able to secure if the LTV and rental income (125% of mge repayment) fits criteria, if it doesn't you may be forced into a position of having to sell it).

As additionally stated, the residential b&c policy you hold will be invalidated - and you will need dedicated landlord insurance.

Ordinarilly lenders do agree to Consent To Let (which is not designed to be a long term arrangement), with a loading to the applicants current mge rate, to make it more akin to sem-commerical rates (which is what the arrangement has technically become).

That being said, they are not duty bound to give consent, and some do insist upon a change to a dedicated BTL product with them, or if they do not offer such an arrangment, and do not wish to give CTL privilidges, instead will request that the mge be redeemed and moved to an alternative provider of BTL mortgages.

Accordingly, as others have done, I would strongly suggest you do not proceed without authority, as the ramifications may be quite serious indeed, you have been offered an arrangement, which I would accept given the situation.

Hope this helps

Holly

Simon_gloster

Couldn't have put it better myself Holly. In all seriousness I know of 2 people who blagged it and got caught by Abbey...won't go into detail.....put it this way it wasn't pleaseant.

On the other hand I know people who have been doing it for years...but would I take the risk myself, no way...what goes around.

holly_hobby

Agree Simon .... lenders are much more savvy nowadays, and do put in place ad hoc checks on accounts - taking robust action where necessary.

My own concern would be in being snookered by the lenders demand for redemption, when my situation didn't fit any BTL providers criteria :eek: !

H

Thrugelmir

d_cross wrote: »

My question is do I have to notify my mortgage co and go through the consent to let route or can I keep quiet and keep the mortgage payments the same.

And if you are unfortunate enough to have the tenant from hell, that trashes the place ?

MissMoneypenny

And if you are unfortunate enough to need to claim on your insurance?
ARLA (Association of Residential Letting Agents) have a warning on their website

http://www.arla.co.uk/information/in...ngs-insurance/

"Consent. It is essential that you advise and obtain consent to let your property from your mortgage lender, existing insurer and head lessee (for leasehold properties). Failure to obtain written consent from these parties may render your insurance void in the event of a claim. Sadly there have been many instances where buildings claims have been totally rejected because the insurer and or mortgage lender was not advised the property was let."

brit1234

You also have the risk of your tenant informing on you, its not worth it.

If you can't afford to rent it out at the banks costs you should sell.

d_cross

Wow, thanks for all the replies guys.

You've confirmed what I thought, basically suck it up! Our attitude to risk with big things like this are to do everything by the book, especially as we wouldn't have sufficient in the bank should everything go south!

Our view is that this will only be a short term (few years) arrangement until we find a suitable house where we are moving to and then we'll sell up and fully move. The timescales are such that we haven't got enough to sell the house now!

I have had a look around and there are some better rates than I've been offered so I think I need to try and see what they'll do.

@ Simon - You are correct it is one of those companies from the South west! We are on their SVR and what they've said is that we need to go onto a new product, which would have to be a BTL, they say we are deriving an income from the rental (doesn't matter if it's only £1!!!).

Cheers