NRAM's Consent to Let Fee increase

drussmonkey

This has been mentioned in one or two threads but I thought I'd repost here to properly highlight this change.

Many NRAM customers who rent out their property previously had two options, a 1 year application for Consent to Let costing a £100 'administration charge', or an indefinite consent to let (if you had an LTV of 70% or below) for £250.

It has not been well publicised that from December 22nd 2012, these charges have changed. To quote from the relevent Tariff of Charges, these are now as follows:

Letting fee £375.00-£1,250.00
This fee reflects the increased risk to us of agreeing to your request to let out your property on a residential mortgage. The fee is based
on the outstanding balance at the time the request is made. You will be informed of the exact fee based on your balance once the
application is made. This fee will be charged in advance for every 12 months whilst your property is let.

The minimum fee is now an eye-watering £375.00, and can potentially be up to £1250.00 depending on the current LTV of the property. Indefinite Consent to Let appears to have been removed.

As many NRAM customers choose to let out their properties, often because they have negative equity and therefore little choice, this is going to be a crippling blow. With >100% equity the fee to rent out the property could represent as much as 25% of the rental income.

These fees can no longer be justified as 'administration fees' and are unquestionably a cynical attempt to extract additional revenue from many NRAM customers who have little choice but to rent out their property.

I would ask and urge MoneySavingExpert to make an official enquiry to NRAM as to just how they think they're justifying this charge, as I think it should be very much publicised. The government purport to be doing everything possible to help customers clear their balances and maintain solvent mortgage accounts, but this radical and shocking fee increase is in direct contravention of such a notion.

kingstreet

A Halifax CTL can see you paying a three year fix at 6% and a product fee of £999, so it could be higher than the NRAM charge.

Nationwide adds 1.5% to the SVR.

The costs of CTL can be high and the lenders have you over a barrel. If you can change lenders, the fees for a BTL and the rates are typically higher than residential, to mark the higher risk.

Thrugelmir

drussmonkey wrote: »

These fees can no longer be justified as 'administration fees' and are unquestionably a cynical attempt to extract additional revenue from many NRAM customers who have little choice but to rent out their property.

NRAM are under no obligation to allow CTL. Whilst you say many have little choice. I suspect many are doing little to address the negative equity issue either. Even when granted permission.

If NRAM fails to liquidate its mortgage book properly. Then its the taxpayer that's on the hook for any shortfall. So a realistic level of fees seems an appropriate revenue stream.

lauraeast23

Yes this will be an issue for me.

I recently moved to the US with my work, so the only option for me financially is to rent out my property.

I am 6.5 years into my together mortgage and only just starting to see the balance come down however I still only pay just over 100GBP of capital off every month, I would estimate I am in around 14k of negative equity, I have never missed a payment, yet now it is looking likely that I could be charged the full 1250 per year, which I am sure that NRAM will 'generously' offer to add to my mortgage if I do not have the funds to pay this (which I don't).

Therefore meaning that despite spending 12 months faithfully meeting every payment as I have done since taking the mortgage by the end of the year I will have paid hardly anything off at all.

It makes me so angry, I knew full well the mortgage I was getting and the risks involved, I accept that the I bought when property prices were booming and I take all of that on the chin, but NRAM just keep on moving the goalposts to squeeze more and more out of us.

"Special 0.01 rates" to stop qualifying for the loyalty discount and now this.

If I could take my mortgage elsewhere then I would but that is now very difficult for me given that I have no equity and am now not even a UK resident, in addition I would not give them the satisfaction of getting the increased rate on the unsecured loan part.

I am becoming more and more tempted to stick one finger up to them, stop paying, let them reposess the damn thing and then suffer not getting their full amount back for it.

Thrugelmir

lauraeast23 wrote: »

however I still only pay just over 100GBP of capital off every month,

Then you are unlikely to repay the mortgage by the end of the contracted term in any event.

You may be better off letting go of the property and coming to an agreement with NRAM to settle the shortfall.

CTL is only ever meant to be a short term arrangement, ie. up to 3 years. So the terms NRAM impose are totally at their discretion.

lauraeast23

Thrugelmir wrote: »

Then you are unlikely to repay the mortgage by the end of the contracted term in any event.

You may be better off letting go of the property and coming to an agreement with NRAM to settle the shortfall.

CTL is only ever meant to be a short term arrangement, ie. up to 3 years. So the terms NRAM impose are totally at their discretion.

What do you mean by let the property go ? Sell it ?

mrginge

So let me get this right. You made a long term financial investment decision that has (in the relatively short term) fallen in value. Rather than accept that loss (which is no-one else's responsibility to resolve) due to your own change in personal circumstances, you were fortunate enough to have a lender who allows you to change the terms and associated risks for a relatively small charge.

You then bleat on about that charge increasing when in reality the lender could have simply refused to allow you to start running your rental business without the correct finance product in place.

You'll be claiming it was mis-sold next.

lauraeast23

mrginge wrote: »

So let me get this right. You made a long term financial investment decision that has (in the relatively short term) fallen in value. Rather than accept that loss (which is no-one else's responsibility to resolve) due to your own change in personal circumstances, you were fortunate enough to have a lender who allows you to change the terms and associated risks for a relatively small charge.

You then bleat on about that charge increasing when in reality the lender could have simply refused to allow you to start running your rental business without the correct finance product in place.

You'll be claiming it was mis-sold next.

Did you even read my post properly, I think you will find that I mention the fact that I knew the product and have never once complained about it.

However since selling me that product NRAM have moved the goalposts several times, despite being a good customer and never missing a payment I was moved along with all of the other "toxic" mortgages.

I cannot move my mortgage (NRAM will not give me a BTL) and in order to keep my job I moved to the US which allows me to keep earning and not default on any of my responsibilities, including the UK credit card and loan that I still have.

It is in their interest to allow me to rent out my property given the circumstances, they weighed the risk versus will I default so this is not just for MY benefit. I also offered them a guarantor which they said was not necessary.

I read several threads confirming that I could simply disappear off the face of the earth and leave all of that credit behind but I am not one of those people.

So excuse me for being angry at a bad situation that is made worse by increased charges when all I am trying to do is make sure that I pay what I owe.

I could of accepted that I lost my job, struggled to get another and defaulted on everything but instead I chose to fight.

Don't judge people and their situations without knowing all of the facts. If you have nothing constructive or helpful to say then don't say anything at all.

And its not a rental business, if I was still in the UK I would still be living in the property, it is the ONLY way that I can afford to keep paying what I owe.

mrginge

Well tbh I was more aiming it at the OP.

However, if you would like a nice pat on the back for fulfilling your contractual obligations then that's fine. However it was you who moved the goalposts, not NRAM.

lauraeast23

mrginge wrote: »

However, if you would like a nice pat on the back for fulfilling your contractual obligations then that's fine. However it was you who moved the goalposts, not NRAM.

Not exactly but given the world that we live in now where people are quick to shirk responsibiliteis and let others pay, I am doing everything that I can to make sure that I am not one of those people, yet am faced with this increased charge, which seems to have other ramifications (as per Thrugelmirs post) that I hadn't even considered.

In fact I did not move any goalposts, my employment moved them for me, and like I already said I am just trying to do whatever I can to pay back what I owe, which hopefully at some point I would like to get to the point of making overpayments

I took out the guaranteed rent scheme from my letting agent so that I would never have an issue with tenant non payment (this is more cost to me monthly but makes sure that NRAM still get their payment)

My rent does not cover my mortgage by a few hundred pounds, so I am not making an money.

Exactly what disadvantage do NRAM get from our arrangement, they still get their payments on time at no additional cost to them, I have NO option but to rent out my property and NRAM recognise that by agreeing to allow the CTL, they realise that it is the best option for them, they cannot offer me what they could have done when I first signed the deal, therefore they have moved the goal posts, whereas they are getting the exact same from me as they were on day 1.

I get that NRAM are still a business and at the end of the day it is all about making money, but this huge jump in charges, it's just another way to kick those whilst they are down. Just like the 0.01 special rate that prevents people from getting the loyalty rate, and I am still entitled to be angry about it.

mrginge

So it's such a money pit why haven't you sold it?