Consent to let

arno1975

Hi everyone,

We are planning to move abroad. We have tried to sell our property in the last year but with no satisfying results. We considered letting out our property but have been told by our C&G ML that our tracker mortgage does not allow for that and that we need a BLT mortgage. We are totally disguted as we had chosen that particular product because it allowed letting. Apparently, the terms of the policy were changed unilaterally by C&G sometimes this year. Now, we are accidental landlords (never planned to let but personal circumstances have made this move a necessity), have a low LTV (about 50 %), only plan to rent for a maximum of 2 years (until the market picks up somewhat) and can not afford the terms and cost of switching to BLT mortgage. In view to our personal circumstances and low risk that we present to the ML, we have asked our mortgage advisor who sold our current product to write to C&G to plead in our favor. Should their answer still be negative, is there anything else we could do?

Thanks

Werdnal

Mortgage lenders change their T&Cs all the time, and TBH with the influx of accidental LLs, I am sure many lenders are beginning to squirm over CTL.

Not a lot you can do other than change your mortgage to a specific BTL - have you shopped around. Infact, if you are planning to let long term, a BTL deal may be much better for you, as mortgage company can rescind your CTL at any time, and put limits on how long you can let, who to, what rent you can charge etc. CTL is deemed a short-term temporary arrangement, and for longer more permanent letting, BTL is the way to go. Also, only your interest payment is allowed against your tax liability, so if you changed to an interest only BTL deal you may actually be better off!

As newbie LLs, you would be wise reading this:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

Particularly important if you are moving overseas is delcaring your tax to HMRC. Non-resident LLs have to comply otherwise HMRC can actually come after your tenant and demand your tax repayments from them. You also need to provide your tenant with a UK address, either friend, relative or a letting agent if you plan to use one, otherwise you cannot legally charge any rent!

A lot to learn and comply with, so CTL may be the least of your worries!

arno1975

We definitely do not want to let long term as a 5% (at best) BLT would just cover mortgage repayments and other costs. Our circumstances make it cheaper to convert out tracker into an interest only tracker and not rent and try on to sell the property. I wonderered if paying off another 10% of the capital to achieve a 40% LTV could help to obtain a CLT as the property would be then mostly ours and not the bank's.

SuzieSue

I know someone who had a fixed rate mortgage with Halifax and was able to get CTL with no problems at all a couple of months ago. He had been with them for over 5 years so I don't know if that made a difference, but he is in negative equity and is on an interest-only mortgage so in a much worse financial position than you. It might be worth considering changing to a Halifax fixed rate as a last resort, but of course they could change their terms so it would be a big risk. I don't think he would have been able to get CTL if he had been on a variable mortgage.

jjlandlord

arno1975 wrote: »

We definitely do not want to let long term as a 5% (at best) BLT would just cover mortgage repayments and other costs.

If this include capital repayment you'd still make a profit.

Also a party in a contract cannot change it unilaterally.

arno1975

No, in the case I am talking about, there is no capital repayment.

Regarding the contract, C&G are saying that they have not changed the terms of the contact that entitles them, allegedly, to change unilaterally the conditions under which they can give a CTL.

Surely, if you own more than 50% of your property, you should be able to let it. And the reason (more like an excuse), the higher risk associated with letting, that ML uses to justify the BTL is at best dishonest.

BitterAndTwisted

Going into business as a landlord with no prior experience and without having it as a long-term investment strategy is not a sensible second-choice option just because you've not been able to sell it "with no satisfying results" yet.

BitterAndTwisted

arno1975 wrote: »

Surely, if you own more than 50% of your property, you should be able to let it. And the reason (more like an excuse), the higher risk associated with letting, that ML uses to justify the BTL is at best dishonest.

I can't see any reason why a lender who has chosen to offer you a residential mortgage should feel obliged to give you Consent-To-Let. You didn't negotiate the mortgage with an option to become a landlord with their money.

Offer the property at a sensible market-rate or get yourself a BTL mortgage.

arno1975

We tried to sell at a sensible market rate and should we sell at our current asking price, we would lose £15,0000. And to be honest, the biggest problem is that not many people in our area actually want to buy properties in our price bracket. So we can not sell unless we sell at a stupid price.

And actually, yes, our mortgage advisors did tell us at the time when we opted for thet Residential mortgage, that we would be able to let the property. The ML just changed the rules because they believe they could make more money out of people. Again!

And as for our intent to rent, we want to do so, not as a short or long term investment, but because we have no other choice and the mortgage whatever happens still has to be paid and we can not really afford to leave the property empty and still pay for it.

Finally, I should have mentionned it earlier, it is also possible that we might want to come back to live in the UK. Should that happen, we would have to change back from BLT to another residential mortgage. Another mortgage fee and not with an interest rate as competitive as the one we have now.

Our personal circumstances required flexibility because I knew that we might have to go abroad and maybe come back to UK. That's why we chose that mortgage. The fact that C&G are just able to change terms as they wish is just another proof of the vast powers detained by the financial institutions and that we are just nothing.

G_M

jjlandlord wrote: »

Also a party in a contract cannot change it unilaterally.

I don't believe this is a change of contract, unilateral or otherwise.

The right to let (or apply for and receive CTL) will not have been written into the contract.

It will simply have been the company's policy at the time, and the policy has now changed.

Yorkie1

I tend to agree with G_M about what the proper position about CTL is.

Your residential mortgage T&Cs will certainly have contained a clause stipulating it was for residential use only, not for letting out.

I suspect what your broker told you was that C&G at that time were fairly relaxed about permitting CTL on residential mortgages. That attitude has now changed, as you have unfortunately found out.

If I am wrong, then you will be able to actually provide the wording of the specific clause in your mortgage offer which says that, despite it being a residential mortgage, C&G would allow it to be let out without further consent being required to be sought.