Accidental landlord

rockdude82

I have a property which I bought in 2008 which has dropped a lot in value when I had it valued last week leaving me still with a mortgage left more to pay than the house is worth, yep in negative equity so unfortunately if I was to sell I would have to find more money to buy my way out which I cannot afford to do. so I looked into renting my house out, I approached the bank and they would not give me a buy to let or consent to let as the rental value of property will not cover mortgage even with my resi mortgage.

I explained the situation to the bank, that I want to move in with my gf as she can't move into mine due to distance and work, her place would be more ideal for me too. If I moved into her place I would be more financially better off as it would cost me peanuts to live there even with paying the extra to cover my mortgage if I had tennents living there.

The banker basically told me discreetly that my only option os to rent it out on the quiet maybe changing to an intrest only mortgage this was said in so many words and I could tell what he was hinting about, , not to happy with his advice I went to seek a finance advisor who's said the same thing which I was very surprised at, he told me abit about his back ground being a bank manager for 25 years and the only way I'm going to do it is renting it out on the quiet.

So I feel kind of feel trapped and dont really know which way to turn not very happy about renting my house out on a resi mortgage unable to sell just stuck.

Werdnal

Many savvy tenants will ask if you have consent to let these days, as "accidental landlords" become more common.

You also have to factor many other costs associated with letting and its not easy money or profit!

I am sure there are many landlords who do take a chance and let without consent, but there are also many who avoid declaring their rental income to HMRC, Gas Safety checks, insurance, deposit protection etc, and I would not condone you doing it. Far too many organisations share records with each other these days, and you may be lucky not to be found out, but as you have specifically asked for consent and been refused, lender may come down harder on you for taking the chance, than if you just pleaded ignorance and got on with it without consent.

mrginge

By all means go ahead and rent it out. Bear in mind though that the 'banker' and 'financial advisor' stand to lose the sum total of knack all should you get found out.

Werdnal

What has happened since this post:

https://forums.moneysavingexpert.com/discussion/4667419=

when in your last line you said "I have been told I can have consent to let?"

rockdude82

Hi I was told first time I phoned up for a quick query that it was an option getting consent to let but when I phoned up 2nd time around to go for it as they started digging around in my finances and situation they wouldn't give it me.

rockdude82

I suppose from one point of view there's no equity in the house so got no money tied in it if I was to let it out, so would not loose anything

Brock_and_Roll

You would if the place burnt down and your insurance refused to pay out - bank would not only send plod round but would sue you for its loss!

grifferz

I'm sure I remember other threads on here demonstrating that it was possible to get buildings insurance for a tenanted property without them asking to show your CTL. I may be wrong on this and am certainly not advocating deceiving your mortgage lender.

Hard to see how it becomes a criminal matter, so the idea of police breaking down your door seems rather far-fetched.

I assume OP has calculated the shortfall involved in a quick sale and found it impossible to cover with personal loans? Don't underestimate the advantage of a clean start with your new relationship vs. years of hardship being an inexperienced landlord with a rental income that still does not meet the mortgage.

ognum

rockdude82 wrote: »

I suppose from one point of view there's no equity in the house so got no money tied in it if I was to let it out, so would not loose anything

You do have a lot to lose.


Please remember that

you must pay tax on the rent you receive.

You must get all the statutory saftey checks completed

you need to maintain the property

Have money available to do updates and repairs

How will you pay your mortgage it you have voids or non payers

Renting is a buisness, being a landlord is not easy.

franklee

rockdude82 wrote: »

I suppose from one point of view there's no equity in the house so got no money tied in it if I was to let it out, so would not loose anything

Well quite, it's the bank's money tied up in the property probably to a level that's more than the property is worth. They have no easy way of getting their investment back so surely they would want the low risk option which is an owner occupier living the the property, looking after it and paying the mortgage. If you allow bad tenants in they could trash the place, refuse to pay rent and take months to get evicted.

It will cost you more to live at your girlfriend's, you cannot count on the rent coming in every month but you will still need to pay the mortgage and your other bills.

This is especially true if the bank discovered an unauthorised let and charges you for consent to let or whatever penalty charges they have. They could even recall the loan leaving you having to find a BTL mortgage with another lender.

Even if all goes relatively well you will be running at a loss given "the rental value of property will not cover mortgage even with my resi mortgage". That's before the other costs of becoming a landlord are taken into account. Agent's fees? Repairs and maintenance? Insurance?

So over time you could end up increasing your debt. You may not consider that a loss but eventually the debt will need to be repaid (unless you go bankrupt or the like).

Meanwhile an unauthorised let affects the tenant's security of tenure as the tenancy isn't binding on the bank. A disgruntled tenant could easily tip off the lender. They can find who the lender is from the mortgage statements going to the let property or from looking at the land registry.

There will be other tell tale signs the occupants have changed, electoral role updated springs to mind. Experian mover alerts etc.

If OTOH you took in a lodger (you need to be still resident at the property but that doesn't stop you staying over at your girlfriend's from time to time) you could earn some money with far less hassle.