How Can The Bank Find Out I Don't Have Consent to Let?

Fire_Fox

Henman_Bill wrote: »

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.

You applied for a residential mortgage, you will no longer be resident so change of circumstances. Do the terms and conditions say anything about moving out or leaving the property vacant? It might not, it's ages since I had a mortgage!

Risk for the tenant if you don't pay the mortgage, may seem unlikely but anything can happen, death, illness, injury, bank errors, Cyprus government freezing all your wages! IMO it's bad form not to be professional when it comes to landlording, this is your business but it's someone else's home. It's tough enough for tenants having overseas landlords that they can't so easily contact. I don't see anywhere that you are considering how unpleasant it is to be evicted or your landlord try to sell from under you either.

"provided none of that leads to the bank finding out"
It worries me that you are so fixated on not telling your lender that you are willing to consider lying (even if by omission) to so many other entities, if land registry don't have your address someone might fraudulently try to sell or mortgage your property and you'd be none the wiser. Tax evasion can lead to a criminal record, not just a fine and a ticking off, a problem with insurance could be disastrous if the house burns down. It might even be your tenants scamming you or stealing your identity.

Do you not consider yourself a law abiding citizen? I'm not simply saying it's morally wrong here because I couldn't give a monkeys about faceless banks, I'm saying it's madness from your own perspective to take these risks with your future, and unfair to your tenants to take risks with theirs.

Henman_Bill

ognum wrote: »

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!

No, not at all, people are always second guessing my motives on forums and always get it wrong, always imaging things that aren't there. I was a little curious to see if I'd get attacked on moral grounds but I feel (fairly) comfortable on moral grounds.

I asked the bank to let me pay the mortgage off at a reduced total sum or pay me a fixed fee to move to a market rate - logical and profitable things for the bank that would have been mutually beneficial - but they are quite inflexible. They once charged us £75 for overdraft excesses and it was the first charge they ever made, and they wouldn't negotiate at all on it. Same bank has been fined huge sums for immoral behaviour far worse than anything I am considering.

Again, I never agreed not to let the property. It is my house and, while it is true that Consent to Let is broadly expected, I have never agreed not to let the property. Is is really reasonable for the bank to in effect charge me £5,000 or £10,000 to let the property for a few years? Of course it isn't, not at all. The extra liability, if there is any since I may even make a profit out of this, just doesn't require that kind of cover. It isn't fair. If they said something fair like add on 0.25% or pay us £100 then fair enough. But they won't.

Am I doing wrong? I think it's pretty grey.

And it's only the bank I won't inform. And if they ever call me and ask me, I won't lie. I am not going to actually lie, only not tell.

As for the others, HMRC, the tenants, the letting agent, and others, I will happily tell them all I am moving abroad. It wouldn't make sense not to.

I am curious to know if telling any of them would likely cause the bank to find out - but I really just want to quantify that risk to help me make a decision, it's unlikely I won't tell anyone else.

You do misunderstand my (primary) purpose for posting here. It's incase I'm missing something. If someone says something like "hang on, HMRC routinely tells all the banks of people's notifications to move abroad, and so do all landlord insurers, everyone knows this. This is well known fact" and then either backs this up with sources, or someone else agrees with such a comment. Then I may have to reassess it. That would be the primary purpose of the thread.

To get opinions, facts is what I want. Believe me it's not about emotional or convincing myself. Not at all.

[Deleted User]

The landlord at my previous-previous place hadn't notified his mortgage lender that he was letting out the property. He fell behind on his mortgage and the letters started piling up, every few days there was a new letter saying pay now! pay up! we'll reposes! I went to the letting agent, they tried to contact him and get him to deal with the issue, but the letters kept coming.

Anyway eventually he paid up and the letters stopped but for a short period while I was renting that place I was concerned that because he didn't have permission from his lender (hence letters coming to the property) I would have to move out at a moments notice, which wasn't a nice position to be in. Everything I read indicated that there are problems for the tenants: the bank could evict them and void the tenancy agreement they have[1].

Not letting your lender know that you're renting the property is not only dishonest to the lender, it's dishonest to your tenants, you put their home in jeopardy. Don't be a jerk to save a few thousand pounds. Although the following strays into making judgements about you based on very little, your attitude here seems to be you're happy to play it fast and loose, not notifying your lender, not notifying HMRC... what about your tenants?

You have a moral duty as a landlord to take care of your tenants, there are problems with a lot of landlords in this country being so very uninterested in doing things properly, please don't be another one of those. Also you seem to have no problem with the possibility of paying thousands in charges from the bank, do you think you're going to be making thousands from letting out this property while outsourcing every aspect of management?

Sell the house, move on.

[1] Maybe someone like G_M can confirm if this is true, I'm not 100% sure but it was what I read when researching the problem.

hugoshavez

Bill: how about this.

Your tenant loses their job, stops paying rent. The bank have sent a letter to the property, which they've opened, and they know you don't have consent.

How would you handle them? Evict?

Henman_Bill

Fire Fox, I never agreed to not leave the property vacant, never signed anything to that effect, it isn't mentioned in any of the paperwork I got with the mortgage.

Yes, I admit there are risks to the tenant, but I think these are very low. There is more than 1 way to be professional - if the tenants are given a month's notice (very unlikely it would come to that) rather than their usual two is it that big a deal? I could just compensate them for the hassle.

Apart from the bank, I am planning to tell everyone else including the land registry and HMRC. Yes I did wonder if it was necessary to tell HMRC given that I wouldn't earn enough to pay tax but I was reminded I have to tell them which I'd forgotten and so I made a mistake there and now I am planning to tell them.

Yes, I am a law abiding citizen. Probably more than most.

The number of times every month or year that I tell a lie is far below the average, it is almost never. Although I do think you need to exercise common sense in what information you give out when not asked.

Annisele

Your mortgage documents are unlikely to say "you mustn't let the house", but they are likely to say something along the lines of "property must be occupied by the borrower" - which comes to the same thing.

I don't think the real risk is the lender finding out. (It might find out - and in a worst case it might demand immediate repayment of the loan, then repossess if it doesn't get it - but I don't think that's very likely).

I think there are three giant risks to your plan:

1) If paying the bank's BTL rate would make the whole affair unviable, then it's probably unviable to start with. What are you are going to do when interest rates go up?

2) Non resident landlord without a great deal of cash = repairs are unlikely to be done quickly or cheaply. If you're using a decent letting agent, that'll probable be fine as they'll sort things out - but decent letting agents sometimes want to see a prospective LL's consent to let. It would be easy for the LA to talk up the damage caused (since you won't see it), and pay their mate the plumber more than the going rate.

3) Your tenant could trash the place / lose their job and not be able to afford to pay the rent / have their benefits cut. All of these things can (and do) happen to all LLs, but if you're in another country and the benefits of renting are marginal anyway, they'll hit you harder than they'd hit others.

Apart from all of that, I don't understand your exit plan. If you're not planning on coming back to the UK soon, why not just sell?

Annisele

Henman_Bill wrote: »

If the tenants are given a month's notice (very unlikely it would come to that) rather than their usual two is it that big a deal? I could just compensate them for the hassle.

If the tenants agree to go, all well. If they don't, then evicting them would be illegal (as in criminal offence) - so that would be a big deal.

Generally tenants do leave when asked, but whether yours do will in part depend on the state of the market. Is it easy for the T to find somewhere new to live? If yes, they'll probably go without much more that moaning. If they can't find anywhere, they'll stay put rather than be made homeless. Most cases are probably somewhere in between.

Henman_Bill

citricsquid wrote: »

The landlord at my previous-previous place hadn't notified his mortgage lender that he was letting out the property. He fell behind on his mortgage and the letters started piling up, every few days there was a new letter saying pay now! pay up! we'll reposes! I went to the letting agent, they tried to contact him and get him to deal with the issue, but the letters kept coming.

Anyway eventually he paid up and the letters stopped but for a short period while I was renting that place I was concerned that because he didn't have permission from his lender (hence letters coming to the property) I would have to move out at a moments notice, which wasn't a nice position to be in. Everything I read indicated that there are problems for the tenants: the bank could evict them and void the tenancy agreement they have[1].

Not letting your lender know that you're renting the property is not only dishonest to the lender, it's dishonest to your tenants, you put their home in jeopardy. Don't be a jerk to save a few thousand pounds. Although the following strays into making judgements about you based on very little, your attitude here seems to be you're happy to play it fast and loose, not notifying your lender, not notifying HMRC... what about your tenants?

You have a moral duty as a landlord to take care of your tenants, there are problems with a lot of landlords in this country being so very uninterested in doing things properly, please don't be another one of those. Also you seem to have no problem with the possibility of paying thousands in charges from the bank, do you think you're going to be making thousands from letting out this property while outsourcing every aspect of management?

Sell the house, move on.

[1] Maybe someone like G_M can confirm if this is true, I'm not 100% sure but it was what I read when researching the problem.

Sorry about the situation you had.

Well first of all, this is only an issue if I don't pay. My mortgage is about 13% of my net salary of my current job and always getting less. If I keep my current job, it is inevitable that I will always easily be able to pay it. But what if I lose it? Well I will probably get another good job. What if I don't and my salary is suddently a lot lower? Well my wife, who never has to work but would be willing to do so, might have to work. Even if that failed my gran is always saying to me "why don't you take your inheritance now" and in addition to that my parents have tried to give me £15k to help with housing. I always turn down that family help, but it is always there as an emergency barrier? What about credit? I get tons of letters offering me credit cards and loans, which I never use. Overdrafts I never use. I could get £10-20k in no time at all if I ever had to. Bottom line - me not being able to pay a £300-400/month mortgage is just never going to be an issue. Nothing is ever 100%, but I am 99% confident I'll never default.

Only real issue I can see there is if I die, get a disability, sickness, injury etc. I need to make sure I have all those areas covered from an insurance standpoint if I do go down this road of renting the property. I do really want to do right by my tenants. I am an honest and fair person.

I am going to notify HMRC. I am going to notify the tenants that I will be living abroad, but not that I don't have consent to let. Although if one of them asked me if I have consent to let I would admit not, and they would have to make a decision on that basis. It might even be a basis for negotiating the rent a bit. Likewise if the letting agents ask for consent to let I would not lie.

To your other question, I can pull in rent of about £450 after management fee on a £300 mortgage and I hope to roughly break even after other considerations like repairs and vacant months. I won't make any money each month. I would be happy with a break even. The point is when I come to sell the house maybe 1-5 years later I will have paid off £1000-£10,000 on the mortgage and created that equity. Hopefully the housing market might have risen a little as well.

I am willing to be convinced, but the main point of the thread was to discuss the questions how will the bank find out, and how likely that they will? and what will happen if they do? Facts about these issues are more likely to convince me to take a final decision one way or the other, warnings of morality, hassle and the risks are relatively less likely to have an impact perhaps, as I have already weighed these up.

Fire_Fox

Henman_Bill wrote: »

Fire Fox, I never agreed to not leave the property vacant, never signed anything to that effect, it isn't mentioned in any of the paperwork I got with the mortgage.

Yes, I admit there are risks to the tenant, but I think these are very low. There is more than 1 way to be professional - if the tenants are given a month's notice (very unlikely it would come to that) rather than their usual two is it that big a deal? I could just compensate them for the hassle.

Apart from the bank, I am planning to tell everyone else including the land registry and HMRC. Yes I did wonder if it was necessary to tell HMRC given that I wouldn't earn enough to pay tax but I was reminded I have to tell them which I'd forgotten and so I made a mistake there and now I am planning to tell them.

Yes, I am a law abiding citizen. Probably more than most.

The number of times every month or year that I tell a lie is far below the average, it is almost never. Although I do think you need to exercise common sense in what information you give out when not asked.

You can ask them to move out at a months notice but you are not serving notice because a one month section 21 has no legal standing. Assuming rent is paid monthly notice is two months and must be rubber stamped by the court if the tenants choose not to go. The tenants are not breaking the law if they stay, S21 is just a notice you will be seeking possession after that date. How would you attend court given you are will not be in the UK? Are you going to pay a solicitor or the letting agent to get them out?

You can certainly offer compensation but you need to be VERY careful you don't fall foul of the Protection from Eviction Act. What you see as a bribe or enticement can be miscontrued as harassment, it would be easy to do if you are in a hurry so need an answer ASAP. Again this is someone's home and the tenants can perceive you to have more rights or powers than you actually do as a landlord.

There is piles of legislation to protect tenants (and landlords), you can't just make it up as you go along, again that is unprofessional. G_M did an excellent post with a selection of the legislation you need to adhere to, hopefully someone will link to it.

Henman_Bill

hugoshavez wrote: »

Bill: how about this.

Your tenant loses their job, stops paying rent. The bank have sent a letter to the property, which they've opened, and they know you don't have consent.

How would you handle them? Evict?

Think this would have to be assessed on a case by case basis depending on my judgement of the tenant and my personnal situation and feelings at the time so I couldn't so for sure but maybe evict them and I am looking to have an insurance policy to cover the lost rent. Once evicted if the bank was moving me to a higher rate because the tenant told them I would probably sell the house. If I do decide to go down this route of renting the house I will actually be making a contingency fund with a monthly payment going towards it to cover these issues. The more scary scenarios you can all come up with the larger it would be. If you can throw enough at me I may reconsider but so far many of people's comments are on things I considered. I am appreciating the input a lot though, it is definately food for thought?

Is there any risk that without me having consent to let I could be put in a condition where it might be harder to get the normal court order to evict within say the normal 8 month* period? I would guess not.

* Not sure if that is right, read it somewhere.