We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
RTB, Consent to let & buying a 2nd property

KaAsChEl
Posts: 30 Forumite
Hi
I am looking for some advice.
We recently brought our council flat from the council under the RTB scheme. The flat was valued at £81,000 and we had a discount of 52% so our mortgage is for £38,880. We planned to stay here for 5 years and then sell to buy a house. We have our mortgage with Santander on a 5 year fixed rate. Our payments are £206 a month.
A family member has very kindly offered to give us £20,000 as a deposit to buy a house now, we have 2 children so would love to be able to buy the house now.
We are unable to sell our flat in the 1st 5 years without having to repay the discount so we are planning to let this out and obtain a mortgage to buy a 2nd property, a house to live in.
We have requested Consent to let from Santander we have had to fill in a form explaining the reasons why and for how long etc.
I have returned this and I am waiting on a response.
Does anyone have any idea what their response will be? I am fully aware they may charge a fee possibly £300?
When obtaining a 2nd mortgage will the mortgage on the flat affect the new mortgage or will it be classed as self funded when let? The flat should let for approx £650 per month.
Thanks in advance
I am looking for some advice.
We recently brought our council flat from the council under the RTB scheme. The flat was valued at £81,000 and we had a discount of 52% so our mortgage is for £38,880. We planned to stay here for 5 years and then sell to buy a house. We have our mortgage with Santander on a 5 year fixed rate. Our payments are £206 a month.
A family member has very kindly offered to give us £20,000 as a deposit to buy a house now, we have 2 children so would love to be able to buy the house now.
We are unable to sell our flat in the 1st 5 years without having to repay the discount so we are planning to let this out and obtain a mortgage to buy a 2nd property, a house to live in.
We have requested Consent to let from Santander we have had to fill in a form explaining the reasons why and for how long etc.
I have returned this and I am waiting on a response.
Does anyone have any idea what their response will be? I am fully aware they may charge a fee possibly £300?
When obtaining a 2nd mortgage will the mortgage on the flat affect the new mortgage or will it be classed as self funded when let? The flat should let for approx £650 per month.
Thanks in advance
0
Comments
-
If this is mortgaged, I am assuming your flat is leasehold ?
If so, in the first instance, you need to check if your lease permits letting.
If its freehold, or the leaseholder gives permission, there is nothing under RTB regs (that I know of) that prevnts you from letting once purchased, albeit you are aware of the 5 yr re-sale issue.
So assuming santander permit consent to let, and no one can predict, apart from I would stick my neck out and say that if your mge is less than 6 mths old, you may find they decline - but let see what happens.
So putting that to one side we now look at your subsequent purchase.
You are buying with a gifted deposit of 20k - from a family member.
Imporant to the lender is what relationship the family member has to you - immediate ie parent, grandparent, sibling, adult child, or more removed ?
If they consider the relationship too removed, they can refuse the gifted deposit, which if accepted, the donor will have to sign a disclaimer stating the gift is made without condition, requirement of repayment or for rights to the property - if there is any requirement to repay the 20k, then it won't be accepted due to beneficial interest issues and the complications it presents in respect of forced possession applications (ie repossession).
The lenders solicitor will also verify the audit trail for money laundering purposes.
With regards to the mge commitment with santander, some lenders will set this aside if it is self sufficient, but not all lenders act in this manner, and will actually include the mge within their affordability calcs.
I would strongly suggest to engage the help of a mge broker to assist with sourcing your new residential mge, and also a BTL mge if santander refuse your consent to let application (given that many BTL lenders don't like ex-local authority properties) - whereby given you a first time landlord, you're looking at a typical max ltv of 75%, and rental income requirement with all lenders of rent being at least equal to 125% of mge interest (use 6% as a ballpark calc fig).
Anyhoo, theres the basics, your broker will gladly assist whilst supporting you throughout the whole application process and beyond.
Hope this helps
Holly0 -
I second the broker option too (as will many of the regulars here) just to save you time and effort.
When we let our first property (on C2L via Bank or Ireland) we wasted an application for a residential mortgage with them because they didn't tell us until we had applied that we could not get a second residential with them under any circumstances (we passed the affordability for both etc).
An experienced broker will no doubt make it as stress-free as it can be. Ask friends for a recommendation.Thinking critically since 1996....0 -
Have you checked the terms of the RTB - can you definitely let it out during the 5 year period?0
-
Be careful.
Some lenders reduce their LTV limit on second properties. Nationwide, for example only lends 85% and will only treat the let as self-funding when you can evidence receipt of the rent payments.
That would mean you had to prove the ability to meet both mortgage payments from your income.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
Forget the mortgage for now, the Right To Buy is the biggest issue by a mile.
You cannot achieve such a big discount to support you getting onto the property ladder and then immediately rent it out for commercial gain, as someone else has gifted you money.
I am 99% sure that the Local Councils track this by who pays Council Tax at each address.
It became a huge issue in our local borough and was constantly in the local papers as they were catching people sub-letting (as such)
I understand you would want a house with a young family, although you really need to speak with your Local Council in advance of executing a plan.I am a Mortgage Broker
You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it.This signature is here as I follow MSE's Mortgage Adviser code of conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Different lenders have different rules over consent to let. As you have discovered, some are only 1 resi mortgage, others will accept that it is effectively a btl but only if it is already tenanted so you need to have rented it out before you purchase the new property which is not practical for many unless they can stay somewhere temporarily.I think....0
-
Hi
I am looking for some advice.
We recently brought our council flat from the council under the RTB scheme. The flat was valued at £81,000 and we had a discount of 52% so our mortgage is for £38,880. We planned to stay here for 5 years and then sell to buy a house. We have our mortgage with Santander on a 5 year fixed rate. Our payments are £206 a month.
A family member has very kindly offered to give us £20,000 as a deposit to buy a house now, we have 2 children so would love to be able to buy the house now.
We are unable to sell our flat in the 1st 5 years without having to repay the discount so we are planning to let this out and obtain a mortgage to buy a 2nd property, a house to live in.
We have requested Consent to let from Santander we have had to fill in a form explaining the reasons why and for how long etc.
I have returned this and I am waiting on a response.
Does anyone have any idea what their response will be? I am fully aware they may charge a fee possibly £300?
When obtaining a 2nd mortgage will the mortgage on the flat affect the new mortgage or will it be classed as self funded when let? The flat should let for approx £650 per month.
Thanks in advance
why don't you put the £20,000 on the flat which you bought, and pay the rest off over the 5 years you have to stay there...then you own that ouright, and can worry about buying a house when you are allowed to...
i honestly don't understand this right to buy thing though, as everyone i know thats bought their place, then just flogs it off for full price and rakes in the profit or rents it out!
if people can get a mortgage and buy their own place why is the council basically just giving away their stock housing, leaving others who have no home, and are destitute, no where to live...
just seems to be a financial windfall to a lot of people...0 -
wannahouse wrote: »why don't you put the £20,000 on the flat which you bought, and pay the rest off over the 5 years you have to stay there...then you own that ouright, and can worry about buying a house when you are allowed to...
i honestly don't understand this right to buy thing though, as everyone i know thats bought their place, then just flogs it off for full price and rakes in the profit or rents it out!
if people can get a mortgage and buy their own place why is the council basically just giving away their stock housing, leaving others who have no home, and are destitute, no where to live...
just seems to be a financial windfall to a lot of people...
I have explained why we want to buy the house now and I am sorry but who is to decide if we are "allowed" to buy a house.
I have been in touch with the council and they confirmed we are allowed to sub let and just need to let them know our correspondence address and notify the buildings insurance. The ladies own words from the council were "you brought the flat you can do what you like with it"
So we just need to wait to hear from Santander about the consent to let, we have spoken to Halifax and they would class the flat as self funded would just need an agent to confirm the tenancy agreement and how much it is let for.
Thanks for the helpful advise.0 -
Yes, as I say, AFAIK there is no blanket contractual clause re a RTB pch and the prevetion of onward letting once purchased (although this may of course be an adhoc RTB clause that individual selling councils/HAs may choose to include in noted restrictions/clauses) ....
Although the argument of whether its right to remove housing stock from the public sector under the scheme, only to re-let it within the private sector, is a moral discussion that will run and run. This is because RTB was essentially designed to enable peeps, whom wouldn't otherwise have the opportunity, the chance of owning their own home courtesy of Mrs T.
So good, you've confirmed that under the terms of your purchase, there is no occupancy or letting restriction (and you are aware of hte 5 yr resale clawback period) - so thats top and tailed.
As I said, you must check the terms of the lease (as I am assuming as a mortgaged flat with santander, its leasehold), re permission for letting - which is completely different to the council saying you can let under the RTB pch arrangement.
Don't forget the comments re the gifted deposit etc ...
Hope this helps
Holly x0 -
The gifted deposit is from my step dad, would that be ok? My mum isn't married to him though they have been together 15+ years and live together.
We have seen a property we are going to view on Monday and have an application for Halifax tomorrow to do the AIP. The rate is fixed for 5 years at 4.59% 85% LTV. Does that sound good? Payments are affordable at £508 a month, borrowing £106,250, putting down £18,750. If the purchase price is £125,000, if we like the place we will try and knock them down slightly.
Thanks for your all your help Holly!0
This discussion has been closed.
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 351.4K Banking & Borrowing
- 253.3K Reduce Debt & Boost Income
- 453.8K Spending & Discounts
- 244.4K Work, Benefits & Business
- 599.6K Mortgages, Homes & Bills
- 177.1K Life & Family
- 257.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards