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How Can The Bank Find Out I Don't Have Consent to Let?
Henman_Bill
Posts: 85 Forumite
My Situation
We have a tracker mortgage. We are going to live abroad. The choices are to sell the house, rent the house and tell the bank, or rent the house and not tell the bank.
We never agreed not to let and the issue is not mentioned at all in any paperwork we ever received or signed. However the bank stated more recently that if I want to let it they would move me off the tracker (in a casual verbal enquiry in conversation).
Which Option is Best
Renting and telling the bank is the worst choice. They would be effectively charging me thousands a year to let it and I would be losing money each month. Selling the house was my first thought. I don’t want to just throw away a tracker rate though. By keeping the tracker rate and renting it out we will be able to cover costs and some years later sell the house at a profit. If I sold it now I would incur debt factoring in costs. And yes I have thought about the hassle and risks of being a landlord, and read the commonly referred to and useful thread on here.
Several forum posts (including on other forums) said that mortgage brokers even advised their clients not to tell the bank.
Ways the Bank Might Find Out I’m Letting
From the RGI/ landlord’s buildings insurance application? As far as I can guess, they wouldn’t share info?
From the utility companies, HMRC, PRTB (registration for landlords)? I doubt these kinds of organisations share info with banks?
From statements/bank letters sent to the house. Already changed to online statements, and will set up mail redirect, and maybe leave SAEs at the house for the tenants to forward mail very occassionally. Obviously, I will not tell the bank about any new address, abroad or elsewhere.
From trying to call the house to speak to me. Need to make sure my landline number is cancelled and removed from the bank’s records.
From a disgruntled tenant taking action. I think is lower risk if the tenant doesn’t know which bank I’m with, doesn’t know I don’t have a Consent to Let, and I have a good relationship with the tenant(s). But you never know as it may still be possible for a determined tenant to cause trouble.
If I fall behind on payments leading to them investigating. Will need to be extra careful to make sure this never happens.
Any other ways that they could find out?
Seems to me, and this is supported by anecdotal evidence on forums, that the bank probably won’t find out. Then again, you never know.
What do you think? How might the bank find out and how likely they will?
What The Bank Might Do If They Find Out
Call in the loan in a short time (how short? 1 month? 3?). If this happens, I will just have to put the house up for sale quickly, potentially at a slight loss vs the market value.
Change me a one off fee but let me continue after all on the current rate. Yeah, I wish I was with one of those banks that do that!
They could move me to a higher rate mortgage. No problem, but I may put the house up for sale if this happens.
They could also demand thousands in backdated payments. Again, the slight risk of this is probably worth it vs the likely gain. I haven’t heard any examples of this ever happening, so my guess is this is unlikely. And, if they do ask for this, I may refuse/negotiate on the grounds that I never agreed not to let the property. Anyway, just to be sure, I may keep a savings account to cover this.
The bank could negatively affect my credit rating. Then again, I am moving abroad.
Prosecution for fraud. Extremely unlikely. Wouldn’t it make the news if it ever happened, and I’ve never seen such a story and can’t find one online, so I think the banks would never or rarely take this route, especially given I haven’t signed anything.
Anything else they could do if they find out?
Perhaps they would just move me to the higher rate, at a guess??
We have a tracker mortgage. We are going to live abroad. The choices are to sell the house, rent the house and tell the bank, or rent the house and not tell the bank.
We never agreed not to let and the issue is not mentioned at all in any paperwork we ever received or signed. However the bank stated more recently that if I want to let it they would move me off the tracker (in a casual verbal enquiry in conversation).
Which Option is Best
Renting and telling the bank is the worst choice. They would be effectively charging me thousands a year to let it and I would be losing money each month. Selling the house was my first thought. I don’t want to just throw away a tracker rate though. By keeping the tracker rate and renting it out we will be able to cover costs and some years later sell the house at a profit. If I sold it now I would incur debt factoring in costs. And yes I have thought about the hassle and risks of being a landlord, and read the commonly referred to and useful thread on here.
Several forum posts (including on other forums) said that mortgage brokers even advised their clients not to tell the bank.
Ways the Bank Might Find Out I’m Letting
From the RGI/ landlord’s buildings insurance application? As far as I can guess, they wouldn’t share info?
From the utility companies, HMRC, PRTB (registration for landlords)? I doubt these kinds of organisations share info with banks?
From statements/bank letters sent to the house. Already changed to online statements, and will set up mail redirect, and maybe leave SAEs at the house for the tenants to forward mail very occassionally. Obviously, I will not tell the bank about any new address, abroad or elsewhere.
From trying to call the house to speak to me. Need to make sure my landline number is cancelled and removed from the bank’s records.
From a disgruntled tenant taking action. I think is lower risk if the tenant doesn’t know which bank I’m with, doesn’t know I don’t have a Consent to Let, and I have a good relationship with the tenant(s). But you never know as it may still be possible for a determined tenant to cause trouble.
If I fall behind on payments leading to them investigating. Will need to be extra careful to make sure this never happens.
Any other ways that they could find out?
Seems to me, and this is supported by anecdotal evidence on forums, that the bank probably won’t find out. Then again, you never know.
What do you think? How might the bank find out and how likely they will?
What The Bank Might Do If They Find Out
Call in the loan in a short time (how short? 1 month? 3?). If this happens, I will just have to put the house up for sale quickly, potentially at a slight loss vs the market value.
Change me a one off fee but let me continue after all on the current rate. Yeah, I wish I was with one of those banks that do that!
They could move me to a higher rate mortgage. No problem, but I may put the house up for sale if this happens.
They could also demand thousands in backdated payments. Again, the slight risk of this is probably worth it vs the likely gain. I haven’t heard any examples of this ever happening, so my guess is this is unlikely. And, if they do ask for this, I may refuse/negotiate on the grounds that I never agreed not to let the property. Anyway, just to be sure, I may keep a savings account to cover this.
The bank could negatively affect my credit rating. Then again, I am moving abroad.
Prosecution for fraud. Extremely unlikely. Wouldn’t it make the news if it ever happened, and I’ve never seen such a story and can’t find one online, so I think the banks would never or rarely take this route, especially given I haven’t signed anything.
Anything else they could do if they find out?
Perhaps they would just move me to the higher rate, at a guess??
0
Comments
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See
https://forums.moneysavingexpert.com/discussion/4512609
If abroad, you must provide an address in Eng/Wales "for the serving of notices".
You must also either use an agent (professional or amateur) to receive the rent, OR get dispensation from HMRC to receive your rent gross of tax OR your tenant should deduct your tax and pay HMRC
Links and more info here.0 -
Right, but for the serving of notices I can just use my parent's address, so no issues there, right? Is this serving of notice address going to be publically available or accessible to the bank? Who does it go to, the tenant and the agent?
For the agent, yes I want to use an agent and I don't mind if I lose the first month's rent or lose 10% of the rent or whatever.
As for HMRC, the amount I will be earning will not be high enough for me to pay any tax (I will have no other UK income). So I suppose technically I should declare it but does it really matter if my total income is only £1000 or £2000 anyway. If I notify HMRC would that info be shared with the bank at all?
I have read the linked article you mentioned, and I have made a note to buy the referenced book later.0 -
It's not fraud it might be breach of contract. More importantly you are leaving the tenants at risk and it's unprofessional. You would need to give your tenant, lender and the land registry an address at which to serve notices/ communicate with you and inform your buildings insurer. Tenants have no legal obligation to forward mail to you or permit anyone to collect it, that is their home not yours.
How could they find out? You not replying to letters, tenants returning to sender, worried tenants contacting the lender to ask if there is consent to lease, change of address on land registry or electoral roll (unlikely) ... tenants can find out your lender from your land registry entry. We often have tenants with overseas landlords or who are receiving mail and we often advise them to check if there is consent to lease.
How would you propose to sell the property with sitting tenants? You would either have to serve two full months notice to quit if out of the fixed term and possibly evict through the courts, or hope that they permit valuations, viewings and surveys. Without any of that you'd have to find a cash buyer, probably at auction and take a massive hit.
You would expect to pay a finders fee for tenants AND 10% management, that would not cover organising repairs and maintenance that might crop up, would your parents do that at short notice? If you don't declare the rent that could be tax evasion, and your tenants are within their right to deduct the tax from the rent and pay themselves OR the tenants can be liable for the tax even if they have already paid you. HMRC can easily catch you, they information share with organisations like local councils now.
But I suspect you have long since made your mind up!
Declutterbug-in-progress.⭐️⭐️⭐️ ⭐️⭐️0 -
Henman_Bill wrote: »Right, but for the serving of notices I can just use my parent's address,
correct.
so no issues there, right? Is this serving of notice address going to be publically available or accessible to the bank? Who does it go to, the tenant and the agent?Tenant - by law you must give this to the tenant in writing or they need not pay rent.Landlord and Tenant Act 1987 usually on the tenancy agreement. If the tenant wants/needs to contact you, this is how they do it officially. Obviously your agent will have a copy. No, not public.
For the agent, yes I want to use an agent and I don't mind if I lose the first month's rent or lose 10% of the rent or whatever.
Probobly 'whatever' - :rotfl:
As for HMRC, the amount I will be earning will not be high enough for me to pay any tax (I will have no other UK income).
Whether you are due to pay tax or not, you must complete a self assessment tax return showing your rental income. You can/will be fined if you don't. You can offset expenses etc and tax may not be due - but the form must be completed.
So I suppose technically I should declare No, not 'technically'. Actually! it but does it really matter if my total income is only £1000 or £2000 anyway. Depends if you are happy to pay the fine!! If I notify HMRC would that info be shared with the bank at all? No idea.
I have read the linked article you mentioned, and I have made a note to buy the referenced book later.
Glad you read it, but read it again! The tax is mentioned there!0 -
It's not fraud it might be breach of contract. More importantly you are leaving the tenants at risk and it's unprofessional. You would need to give your tenant, lender and the land registry an address at which to serve notices/ communicate with you and inform your buildings insurer. Tenants have no legal obligation to forward mail to you or permit anyone to collect it, that is their home not yours.
How could they find out? You not replying to letters, tenants returning to sender, worried tenants contacting the lender to ask if there is consent to lease, change of address on land registry or electoral roll (unlikely) ... tenants can find out your lender from your land registry entry. We often have tenants with overseas landlords or who are receiving mail and we often advise them to check if there is consent to lease.
How would you propose to sell the property with sitting tenants? You would either have to serve two full months notice to quit if out of the fixed term and possibly evict through the courts, or hope that they permit valuations, viewings and surveys. Without any of that you'd have to find a cash buyer, probably at auction and take a massive hit.
You would expect to pay a finders fee for tenants AND 10% management, that would not cover organising repairs and maintenance that might crop up, would your parents do that at short notice? If you don't declare the rent that could be tax evasion, and your tenants are within their right to deduct the tax from the rent and pay themselves OR the tenants can be liable for the tax even if they have already paid you. HMRC can easily catch you, they information share with organisations like local councils now.
But I suspect you have long since made your mind up!
I don't believe it's breach of contract because I carefully went through every piece of paperwork I ever received from the bank and there is no agreement not to rent. I called the bank and asked them if they could send any agreements I ever signed when taking out the mortgage (just as a double check) and all they could offer was to send the current terms and conditions.
Where is the risk to the tenant? I just don't see it? I admit I could be missing something, though?
"You would need to give your tenant, lender and the land registry an address at which to serve notices/ communicate with you and inform your buildings insurer." Fine - no problem - provided none of that leads to the bank finding out.
On mail forwarding, I will be changing most mail to my parent's address, and bank statements from the lender are already set the online only. For other mail I will have a Royal Mail redirect. Agree that the tenants have no responsibility to forward and it would up to them to help me out. But all I would be saying is "I've changed my addresses and set up a redirect, just in case anything comes through just send me through a packet of mail once every 3 months to my parent's address." (And then I would leave envelopes with the address and postage ready - just a thought, fair enough if they don't want to comply, but I think most people wouldn't mind, but not a major issue.)
When I sell the house I will sell it with the tenants in ideally, during a reasonable notice period, try and make a deal with them, if that fails will have to serve notice I suppose and then take a few months to sell with an empty house and take a hit - more than willing to do that. Obviously having to evict a tenant over best part of a year while not receiving rent is a major issue and risk (especially when coupled with further months of non-payment while I wait to sell). I guess I just think this is a calculated risk, and I am looking into an insurance to cover lost of rent.
"You would expect to pay a finders fee for tenants AND 10% management, that would not cover organising repairs and maintenance that might crop up, would your parents do that at short notice?" Have factored all this into my risk/reward calculation. My assumption is that the management agency will sort out the repairs, but I will probably have to pay them, maybe >£1000 a year to be put aside for this with obviously a risk that it could be much worse as well.
I probably will tell HMRC about the rented property. Do you think it is bad to not tell them, even if the income is at such a low level that no tax would be liable anyway?
Wouldn't say I have completely made my mind up, but definately leaning towards renting and not telling the bank. I likely won't be convinced by just "what you're doing is wrong" but I have missed some facts I am willing to consider it. If I thought the bank finding out within a short time was very likely I would reconsider but anecdotal evidence seems to suggest not (e.g. saw some posts that said they found out after 2-3 years, others that said I have done this for years and they never found out, never saw one that said: they found out after 1 month).
Thanks a lot for taking the time to respond.0 -
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Redirect only lasts for a maximum of 2 years and cannot under any circumstances be extended thereafter. Do you plan to be abroad any longer?0
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Some discussion points were made here about this as well
https://forums.moneysavingexpert.com/discussion/4512609
To summarise and consolidate, the bank might be able to find out if they are tracking my building insurance, and a landlord without a consent to let may pose a greater risk for tenants as they have less security and rights in the case of a mortgage default. I think those were the main points as relevant to this thread.0 -
Redirect only lasts for a maximum of 2 years and cannot under any circumstances be extended thereafter. Do you plan to be abroad any longer?
I am aware of this problem. I have no solution to it as such. (I am also aware that redirect doesn't always work fully.) It's likely that we will be abroad for longer, perhaps much longer, but cannot be sure. We may want to sell the house in a couple of years if interest rates or house prices rise enough.
I think it's worth stressing that I will not be receiving a load of mail to this address. Most things I will change my contact address to my parent's house. The banks statments of my lender, including the mortgage, are already set to online only. A problem would certainly be if the bank sent me a letter rather than a statement as I may never receive some important communication like "excuse me, are you letting?" I don't think it will be suspicious to the residents if they get the occassional letter. Everyone gets junk mail.
I also think if I leave them some stamped addressed envelope large enough to put all the mail in and then call them once every 3 months to ask them to send it to my parent's house it's unlikely to cause a problem. I would think most people would be willing to do it as a favour. I will of course explained I have cancelled most things, but you can't be sure to cover everything.
Yes, there are some risks with this. I guess I have just decided that the benefits outweight the risks and hassle for now.
If I sell the house this year I take a thousands of pounds loss when agency and solictor fees are factored in, if I wait a few years and sell it we don't start our new life with that loss, and in a few years we might have 10k of positive equity.
If enough people can put forward enough arguments it's not impossible I'll change my mind. A month ago I was thinking of selling the house just to avoid the hassle but what I've been thinking this month is the financial gain can't be ignored.0 -
Bill
from the way you write your posts it seems you believe you will be not doing the right thing by withholding the information and you have come here to talk yourself into thinking you are doing no wrong.
If you are moving abroad you do need to inform your bank, the HMRC, your letting agent and your tenants.
If you choose to not do this that is up to you but don't seek to make it right here!
Your choice!0
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