Consent to let refused

green-tea78

Hi,

I would like some advice.

I bought my (leasehold) flat two years ago and in February I remortgaged with Tescos on a 2 year fixed rate repayment deal. At the time that I took the mortgage out I knew that there was a chance that I may move in with my boyfriend and I asked Tescos if they would allow me to get a consent to let at some point. They told me that they would treat each case separately. As it was not an outright no, I decided to go ahead with the mortgage. My LTV is around 66% but could be better than this if I had the flat revalued.

I have now decided to move in with my boyfriend and I telephoned Tescos to ask if I can get a consent to let. They asked me if it was a permanent move and I said yes, they then said that they wouldn't offer a consent to let because it was my choice to move.

I'd like to know:

If I were to go back to them and ask for just a year's consent to let is it likely to make a difference?

If I decide to rent out anyway, what are the risks? Would my insurance be invalidated because I have not got permission from my bank - so if the tenants were to burn the house down would I not be able to claim?

I don't really feel that I can remortgage to get a buy to let at this stage because I will have to pay a 3% redemption charge plus pay a high arrangement fee for a new mortgage along with a higher rate of interest so my other option would be to leave the flat empty.

Any help or advice would be gratefully received.

Thanks

ACG

With regards to the fees involved - you should have budgetted for these when deciding whether to tie into a new deal or not.. but im presuming you have now realised this.

It is just that, consent and they do not have to agree it. As they are a new lender their policies are very much new to everyone so its difficult to say but you can ask if they will do it whilst your tied in - i wouldnt expect a positive answer though.

As for the insurance, read your documents or speak to your provider. You should be able to get landlords insurance on a residential mortgage but you need to speak to the provider.

The other thing you need to be wary of is that if Tesco do find out, they may well insist on repayment of the mortgage as you are effectively breaking the T&C's.

carslet

I would go back and say that is not permanent (as you never know what might happen split up etc..) and see what the situation is in 2 years. then you may be in a position to change it over to a BTL. They usually give consent to let if people are 'saying' they might be going away to work.

As for letting it out anyway, I know many people have done this, and never been caught, you would have to get landlords insurance and I have read on here that some say in the small print about your mortgage company Knowing you are letting it, and others don't. I am sure someone will be able to answer you better than me .

holly_hobby

Firstly you need to check the terms of your lease - to see if it permits letting.

Secondly, you could go back to your lender and say its only a temp arrangement, whether they have made a file note re your initial enquiry, and don't accept the change to the story (ie perm to termp arrangement), is ulitmately their choice, they can and may still refuse your application.

If you let without your lenders consent, then your blds insurance is invalidated (even if its a landlords policy, as on any blds claim they will contact the lender to confirm its permitted let status, which is reqd for a valid claim).

Just as important, is the fact that you will be in breach of your mge t&cs, whicn means that if the lender discovers the unauthorised let, you are in hot water.

So, assuming your lease terms permit the let, and your current lender refuse your request, you would need to source a BTL remortgage (subject to max ltvs and rental income being at least equal to 125% of mge interest, using 6% as a ballpark calc fig).

You may of course choose to just let without any permissions in place, but if so please be aware that the repercussions may outweigh the initial benefits.

Don't forget to declare rental income via annual SA (unless net rental income is below £2500, when PAYE attachment can be sought instead).

Hope this helps

Holly

brit1234

carslet wrote: »

As for letting it out anyway, I know many people have done this, and never been caught, you would have to get landlords insurance and I have read on here that some say in the small print about your mortgage company Knowing you are letting it, and others don't. I am sure someone will be able to answer you better than me .

:mad:
Sorry but this is shocking, your recommending criminal action to a poster. The penalties could be arrest for Fraud by failing to disclose information (Fraud Act 2006), black listed by mortgage companies, penalty fees, charged higher rates. Increasingly people are being caught and just because your friends do it doesn't make it right.

To the original poster if you can't get consent to let then you either remortgage to buy to let paying the fees with a loan if necessary or you sell the property.

If you keep your home insurance and rent it out it will be invalidated. If you get buy to let insurance and rent it out it will be invalidated and your mortgage provider will most likely find out. Their computer systems share information to stop this fraud.

ACG

Where is he recommending it?!

He is saying he knows people who have done it. Ive rented out a property i owned without obtaining consent to let - it was before i was in the industry and genuinely didnt know i needed it.

I think its very unlikely you are going to get arrested for such an offence. They cant arrest the local drug dealers, thieves and hooligans in my area this would be right down the list of people to send to jail.

brit1234

ACG wrote: »

I think its very unlikely you are going to get arrested for such an offence. They cant arrest the local drug dealers, thieves and hooligans in my area this would be right down the list of people to send to jail.

You should move to my area then. Mortgage fraudsters, drug dealers and thieves all been arrested there.

Why do think I know the offence.

ACG

Because your trying to scaremonger?
You also appear in all of your posts i have seen to be very bitter about the mortgage market as a whole... no idea why, but personally i take all of your posts with the pinch of salt they need.

holly_hobby

Seeking mortgage finance on bogus information would certainly be fraud, and a criminal offence if the lender elected to report and pursue in addition to CIFAS registration (as we have seen in the past, with custodial sentences certainly in instances of large scale abuse).

However, breaching t&cs (post completion) would at worst, result in the lender asking the mortgagor to seek an alternative provider - it wouldn't be a fraud case or result in any judicial pursuance - unless intention to defraud (eg major breach of t&cs) from outset was proven, which isn't the case with our OP, whose personal circs have simply changed prompting the desire to let her property.

Hope this helps

Holly x

carslet

brit1234 wrote: »

:mad:
Sorry but this is shocking, your recommending criminal action to a poster. The penalties could be arrest for Fraud by failing to disclose information (Fraud Act 2006), black listed by mortgage companies, penalty fees, charged higher rates. Increasingly people are being caught and just because your friends do it doesn't make it right.

To the original poster if you can't get consent to let then you either remortgage to buy to let paying the fees with a loan if necessary or you sell the property.

If you keep your home insurance and rent it out it will be invalidated. If you get buy to let insurance and rent it out it will be invalidated and your mortgage provider will most likely find out. Their computer systems share information to stop this fraud.

I should have said I would never recommend doing it, I was just saying I know people that have done it, and never been caught.

carslet

ACG wrote: »

Because your trying to scaremonger?
You also appear in all of your posts i have seen to be very bitter about the mortgage market as a whole... no idea why, but personally i take all of your posts with the pinch of salt they need.

Looks to me as if he is bitter about the housing market / prices too. Although I do think house prices are too high in this country.