Mortgage and renting my house

Werdnal

Nicolam56 wrote: »

Ohhh noo,I didnt know I needed to pay tax on it I thought my mortgage was enough

The mortgage and tax are 2 different and totally unrelated issues. The mortgage is being paid to your lender for the loan of the finances to buy the property in the first place. The tax is income tax - rent received is the same as any other "income" you get, and you have to declare it.

You cannot just keep it as you are paying the mortgage, and your own rent doesn't come into the equation either, as your own living expenses are not part of your rental "business".

You need to learn how to be a landlord and make sure you are covered for all the legal obligations, otherwise the problems you mention in your OP could be the least of your worries.

Read this:

http://uk.mg41.mail.yahoo.com/neo/launch?.rand=duua8kpq2g45e

to try to understand what you should and shouldn't be doing.

flutterby123

Sounds like you're in a horrible situation! As far as I can see though this is mortgage fraud and tax evasion so you need to be careful how you proceed. Would it not be an option to move back into the mortgaged property?

We are about to rent our property out and being the honest people we are, we have told our mortgage company and are paying a higher interest rate and will only make a small profit! Rather that though than break the law.

Thrugelmir

dacouch wrote: »

If you have a Landlords Insurance Policy then the chances of your Insurance being invalid due to you not having Lenders Permission is negligible. It goes against a basic principle of Insurance.

Read the contract details of the policy. Lenders permission is standard clause in majority.

Basic principle of insurance is that you should comply with the terms.

barnaby-bear

Nicolam56 wrote: »

I am renting privately as my mortgage would have gone up 235 pound a month because I was renting it out,I'm not sure about tax,I pay buildings insurance and my rent,there is no equity on it I just want to leave it for my kids

Have you got the deposit in one of the prescribed schemes? IF you haven't you can't give the tenants notice and they could actually sue you for 3x the deposit. If you rented it in the last few years you should have given the tenants an energy performance certificate. If it's a flat there may well not be gas, but if there is and you don't have a safety certificate you could be prosecuted - you really should do that ASAP.

If you moved back in you would be eligible for SMI http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/Mortgagesandrepossessions/DG_180066

Your lender will probably move you to a higher rate BTL product when you notify them so you should budget for the increase.

Yorkie1

flutterby123 wrote: »

Sounds like you're in a horrible situation! As far as I can see though this is mortgage fraud and tax evasion so you need to be careful how you proceed. Would it not be an option to move back into the mortgaged property?

We are about to rent our property out and being the honest people we are, we have told our mortgage company and are paying a higher interest rate and will only make a small profit! Rather that though than break the law.

It is not mortgage fraud because the mortgage was legitimately taken out initially. It is just breach of the contractual terms and conditions to remain resident in the property rather than let it out.

ruggedtoast

Thrugelmir wrote: »

If you are in breach of mortgage terms then you are in danger of seriously impacting your credit rating.

Your insurance is invalid should you make a claim if lenders permission has not been sought.

I'm not a landlord nor do I have a vested interest in letting out my house without my bank's permission, but I have to say this old bone has been chewed over and over on here.

The common advice is always that renting without permission to let will result in invalid insurance and immediate repossession by the bank; yet so far no one who says this has managed to provide any evidence whatsoever that I have seen that this has ever happened to anyone, not even a link to an anecdote on another forum.

The terms and conditions on my mortgage state that permission to let will never be granted, but if the property is rented out, and the bank subsequently discover it, they will charge 2% interest above SVR. They may as well be telling you not to tell them if you do rent out. I suspect as long as they keep getting their money they aren't bothered especially.

One thing that is certain is what tenants' whose landlord hasnt got permission to let are up the swanny if the bank starts repossessing.

dacouch

Thrugelmir wrote: »

Read the contract details of the policy. Lenders permission is standard clause in majority.

Basic principle of insurance is that you should comply with the terms.

If it's so common, go find me a Landlords policy that specifically states cover is subject to their being consent to let.

Even if you do manage to find one, a basic principle of insurance is a warranty stating say you must have certain locks or consent to let cannot be used to decline a claim if the breach of that warranty has no influence on the claim. It;s an obvious protocol to have as otherwise claims for say storm damage to a home could be thrown out for not having the correct locks etc

How do you propose not having consent to let would influence a claim on a Landlords property policy?

I'll be impressed if you find an Insurer who do stipulate failing to have consent to let voids or in any way affects the policy.

Backmasker

ruggedtoast wrote: »

The common advice is always that renting without permission to let will result in invalid insurance and immediate repossession by the bank; yet so far no one who says this has managed to provide any evidence whatsoever that I have seen that this has ever happened to anyone, not even a link to an anecdote on another forum.

In 2009 a macerator in the house I was renting broke and pushed waste out of the upstairs toilet . This brought down the hallway and living room ceilings.

Our landlord did not have permission to rent out the property and the buildings insurance refused to pay for the work. As a result the landlord needed to find funds of around £4000.00 which he did not have. This left my family and I with only the use of two rooms until we found another home.

The local council took action against the landlord and ordered a huge amount of work was carried out on the property.

nollag2006

Backmasker wrote: »

In 2009 a macerator in the house I was renting broke and pushed waste out of the upstairs toilet . This brought down the hallway and living room ceilings.

Our landlord did not have permission to rent out the property and the buildings insurance refused to pay for the work. As a result the landlord needed to find funds of around £4000.00 which he did not have. This left my family and I with only the use of two rooms until we found another home.

The local council took action against the landlord and ordered a huge amount of work was carried out on the property.

Sounds like he had regular home insurance, rather than LL insurance.

nollag2006

Thrugelmir wrote: »

Read the contract details of the policy. Lenders permission is standard clause in majority.

Basic principle of insurance is that you should comply with the terms.

Really? Where did you get that from?

I have seen multiple Landlords insurance documents and have never seen a clause referencing mortgage consent.

I am not saying they dont exist, rather that such clauses are very rare.