Admin fee for permission to rent

JCR

I recently had to get permission from my bank to rent out my property. They agreed to me keeping the same rate as my residential mortgage but asked for an admin fee of £495. I thought this was rather steep as it was just a case of doing a miniscule amount of paperwork. Anyway I decided to ring them and challenge them on it, and without hesitation they dropped the charge down to £195.

Does anyone agree that this is still a high charge and may come under the "unfair charges" subject, or do you think they are justified in this charge?

Ian_W

I think it's a bit more complicated than simply comparing the work involved in changing over the details - it involves greater risk for the lender than a normal residential mortgage does. That's why some lenders increase the % interest rate if you apply for permission to let.
If you default whilst living there they only need to get a possession order from the County Court to evict you and repo the property. If there is a tenant with a normal 6 month agreement in place they have to take action against you as the mortgage holder and then decide whether they can take court action to evict the tenant or leave it and give them notice at the end of the agreement.
You could always go for a BTL mortgage if you're not happy.

nollag2006

Why declare it at all ? I've never done ...

JCR

You are required to declare it otherwise it negates your buildings insurance, also the penalty if they found out is probably more than the admin fee, so it's not worth it.

keeperbear

JCR wrote: »

You are required to declare it otherwise it negates your buildings insurance, also the penalty if they found out is probably more than the admin fee, so it's not worth it.

You obviously tell your insurance company if you let your home. However, why bother telling your mortgage company? How exactly will they find out about a tenant? Even if they did, I doubt the 'penalty' (if there is one) would be more than these idiotic admin fees for permission to rent.

Generali

keeperbear wrote: »

You obviously tell your insurance company if you let your home. However, why bother telling your mortgage company? How exactly will they find out about a tenant? Even if they did, I doubt the 'penalty' (if there is one) would be more than these idiotic admin fees for permission to rent.

The problem is, if things go wrong (heaven forbid) and you ever get reposessed and the lender finds out that you have rented the house without permission they may decide to employ m'learned friends. Doesn't seem worth it to save 200 quid.

JCR

It is an idiotic fee, I totally agree, but I am sure, knowing my luck, they would have found out about it somehow. I can never get away with this sort of thing, so thought it was better for me to be all above board.

bionic_banjo

The thing is - say if you dont tell the Morgage Co, but you have the correct insurance - and then the worst happens - you as landlord cant afford the mortgage so they foreclose and take the house...and find a tenant there. Say the tenant has the first 6 months AST and then say it goes to a month to month periodic tenancy. So - after the expity of the fixed term element of the AST, the worst case scenario is that the Mortgage co have to give the tenant a months formal notice to quit. So what have they lost in financial terms?? One months interest on the 'forced sale' value of your house. That is all they could come after you for in damages for breach of contract. Would they bother with the paperwork even I wonder?

Guy_Montag

bionic_banjo wrote: »

The thing is - say if you dont tell the Morgage Co, but you have the correct insurance - and then the worst happens - you as landlord cant afford the mortgage so they foreclose and take the house...and find a tenant there. Say the tenant has the first 6 months AST and then say it goes to a month to month periodic tenancy. So - after the expity of the fixed term element of the AST, the worst case scenario is that the Mortgage co have to give the tenant a months formal notice to quit. So what have they lost in financial terms?? One months interest on the 'forced sale' value of your house. That is all they could come after you for in damages for breach of contract. Would they bother with the paperwork even I wonder?

Regrettably if the mortgagee repossesses your dwelling, the tenant can be kicked out almost (possibly entirely) without notice (the contract being between the LL & the tenant). Of course the tenant can then employ m'learned friends to sue the LL for breach of contract - but if he's just been repossessed, the tenant might not get anything. A charge on his residential property perhaps. F'k it though I would, just for !!!!!! & giggles

bionic_banjo

If you were on a periodic tenancy (month to month), the court wouldnt award more than a months rent in damages.....the court will only financially put you in the position before the breach of contract occurred....Then you would have to pursue the exLandlord for the damages in the normal way. That does not include putting a charge on the house you have just been evicted from because that woul now belong to the mortgage co!

thesaint

Guy_Montag wrote: »

Regrettably if the mortgagee repossesses your dwelling, the tenant can be kicked out almost (possibly entirely) without notice (the contract being between the LL & the tenant). Of course the tenant can then employ m'learned friends to sue the LL for breach of contract - but if he's just been repossessed, the tenant might not get anything. A charge on his residential property perhaps. F'k it though I would, just for !!!!!! & giggles

A mortgage company would have to follow the same procedure as everyone else when it comes to getting vacant possession of a property.