Renting my flat against terms of Lease - what will happen ?

Juanito70

Ok, the lease which I knew about when purchasing my flat 10 years ago states the following about subletting,etc

(p) Not at any time to underlet the flat or any part thereof and not at any time assign or part with the possession of part of the flat and not during the last 7 years of the term hereby granted to assign or part with the possession of the Flat without the written permission of the Lessor.

(s) to use the Flat for residential purposes by one family only.


So the person has ALREADY moved in, they rent my spare room and share the bathroom and kitchen. When I leave the Uk for 8-12 months to work and live they will continue in the flat alone. I will lock my bedroom and return early 2014. My mother will be visiting London from the Northfor a long weekend once a month or every 6 weeks to stay in the flat and check things over, the person who is renting knows and is fine with this.

Home Insurance - This does cover the personal possessions of my stuff and the tennant up to a value of £20,000 for contents. It does not matter that I work abroad the policy would still be valid if a burglary took place at the house and some things went missing.

Building Insurance - All five flats pay one fifth of the annual building insurance about £210 per flat to cover terrorism, fire, subsidence, etc. Every five years we pay one fifth of the external maintenance costs for repainting, the roof, etc

Certificates - I am having a new boiler fitted before I leave and will obtain the recognised certificates for gas and electric.

I have paid the mortgage for 10 years without fail, yes I am with the Halifax, who sacked me in 2008 from a high paid position for unsatisfactory receipt of a reference from a former employer - LTSB, who two years earlier had dismissed me after 8 years. So i cannot gain employment in this sector despite having worked in financial services for 12 years since Uni and cannot afford to stay on in this flat, but I dont want to sell it until i see how things work out in Latin America.

There is no point in asking permission from resident Freeholder because they know and cat is out of the bag, they saw the lady move her things in last week !

So, i m more worried about the Freeholder putting sneaky letters on the table in the communal hallway or trying to do stuff about the subletting when they know im away , and someone is in my flat.

Juanito70

The tennant has moved into the flat already and paid deposit and first months rent. My mother will be visiting the flat every 4-6 weeks, stay in my bedroom and clean the place and sort my mail.

There is no chance of subletting, she would find out. I am not short changing the landlord freeholder because they receive ground rent, external maintenance costs and annual buildings insurance for the last 10 years without fail and I am substituting one person for another.

The mortgage company have had their payments regularly and on time for 10 years. The same company who made be redundant after 2 months , who increased my mortgage payments last april by £100, against terms of contract by increasing the SVR from 3.5 to 3.99%, and apologised and offered £300 compensation for this change. Despite a loan of £225k and a value of £400k , I am stuck in this flat, when I sell I will never be able to have a mortgage again because my earnings are overseas and they do not lend to people who earn only $10,000 per annum. I cannot port the mortgage and buy another 'rentable' flat in london because they said that is forbidden now unlike 4 years ago and i dont earn enough to have new loan, not even a further advance !

Juanito70

jaja.....thanks security man, when i sell in 2014 or 2015 I will remember that, to sell to a housing association, or a family with 2 young kids who will forever run about on the freeholders ceiling considering I live directly above them.

kingstreet

See post #6.

Have you mooted the idea of consent to let to Halifax?

If you haven't get the product transfer, then ask for consent.

Our BDM suggested this.

Juanito70

Hi King street,

Do you work in Hammersmith for HBOS by chance ?

I may ring the Halifax and ask for consent without providing my mortgage account number actually.

Im on an SVR from 4 years ago when my fix rate ended, it is 3.99% , moved up from 3.5% last May. My LTV of 57.66 % is based on the flat being valued in a very nice london area last week by estate agent coming around and in writing confirming the asking price should be £399,999 for a two double bedroom flat. If you work for HBOS, you should know they DO NOT accept this and will use an internal computer programme to give you an 'index linked valuation' which will be completly off the mark and put my LTV at 65% probably.

I cannot move products or transfer, I have no UK income, I teach in south america and earn $$$$, despite having £175,000 equity I cannot remortgage, move to another lender, etc...My only options are to

SELL the flat and put £160 in the bank at a crap interest and have no base or home in england

FIND a crap job here in london , like I have done for the last 3 years, and find all my monthly income goes on paying the mortgage, council tax and bills alone

RENT the place and let someone else have all the hassle of paying the mortgage, internet, TV licence for crap programmes, and £125 month to collect the bins to local council

IM more worried when HBOS start investigating why i do not have an endowment, ISA or savings to pay back the interest only loan i took out in 2002....do you think there will come a time when they say look we know your flat is worth £175 more than our loan but you are going on repayment method or we are not lending you money on interest only in the future..!

muchisimo gracias compa

kingstreet

I'm an independent mortgage broker in Stafford. My Halifax Business Development Manager suggested the route I outlined, but the product transfer must be done before requesting consent.

A request for consent on SVR will see you required to accept one of the CTL products, which IIRC is around 6% fixed for three years with £999 fee.

The desktop valuation is the first option, but you can pay the £80ish fee for a drive-by if you want a more accurate valuation.

Product transfers are not income or credit dependent and there are rates available even if you end up in the next LTV banding. 3.39% is the two year fix at 60%, 3.69% at upto 75%.

Juanito70

Hi, thanks for the information. I will have a think about that product transfer for sure. I also have to factor in whether I will be selling up, taking the 160-170k and buying a house up north where I am from without a mortgage within the next two years which is quite likely.

In that case a product transfer on a two year fix would mean having to pay a hefty redemption fee to get out if I decide to sell in London in next 2 years ?

I thought there was a £199 valuation for HBOS sending out someone to the property to do an internal visit and see how good the property is inside and then this value stays on your file for next five -10 years until updated.

Many thanks for your help and guidance, and have a great new year.

Sometimes, it just feels like asking for CTL from your lender is like opening a can of worms, because if it is declined, do they send people out to the property to check to are still living there and not renting. The only communication I receive normally from the mortgage lender is a annual mortgage statement and every so often a letter saying payments have increased.

kingstreet

You'll be on a three year fix with three years ERPs if you ask for consent before doing the product transfer as that's all they'll offer you. The two years is the lesser of two evils and at a much better rate.

If you ask for consent then withdraw or they decline it, they will write to you regularly for proof of residence.

IIRC it's about £80 for a drive-by and about £135 for an internal. You could always phone Colleys and confirm it.

http://www.halifax-intermediaries.co.uk/products/mortgages/product_transfer/revaluation-option-qanda/default.aspx

sharpee

What abut being a non resident LAndlord and the tax implications? How are you going to manage that?

kmmr

Technical question for the experts. Isn't the tenant really a lodger? Sounds like non exclusive use of the flat (one room locked with ops stuff) and mother staying regularly?

Then the ctl issues go away. Still a freeholder issue, but tbh that seems manageable and lease forfeit for a lodger would never be held up IMHO.