Want to sublet whilst selling, Do we need a BTL mortgage?

K1RST1E_2

Morning All,

My husband and I have inherited his parents home, well half of it but we have agreed with my sister in law that we will buy the other half off of her. The house is worth £160k.

We currently own a 50% share in the house we live in. We pay rent on the other half to a HA. We are selling this house but want to move in January as the new house is closer to our workplace, family and our daughter's nursery. The HA will not allow us to sublet the property nor vacate it (not being our principle home) so our only other option is to use some of the equity in the other house to buy the other half of the shared property if we don't sell it before the New Year.

We can afford to have 2 mortgages with our income but I'm unsure if we need to have a BTL mortgage to sublet our current home? Subletting is only a short term solution, until we've sold it. I do have an appointment booked with a mortgage advisor to go through all of our options next week and the figures but just wanted to be prepared for what they may say.

Thanks.

getmore4less

THe HA cannot stop you living somewhere else some of the time.

Do they stop you having lodgers if not this may be a interim solution,

one of you stays in the place(on paper stopping over occationaly) and rest of you move to the new place.



One of the issues with subletting will be the timescales on selling with 6 month tenancies etc. tenants might not want to allow viewings.


How long can the sis wait for their money?


Another option might be to get a large mortgage on the inherited house that can be overpaid, perhaps offset If that lets you buy out the HA with cash

Then you would only need concent to let on the current place not a new mortgage

How much is the HA place worth whats the current mortgage.


when you eventualy sell you pay off sis and any surplus of the mortgage.

holly_hobby

To let under a shared ownership arrangement - you'd need both consent to let from your current mortgage lender AND suitable permission from the HA .

Min tenancy term of 6 mths under an AST - as discussed above - and you would have to have the agreement of tenants for viewings of potential buyers ... which I would recommend be ether accompanied by the EA or with you meeting them there, just to ensure that they have access and the tenants are not saying things they shouldn't be to put potential buyers off.

This is fraught with issues, and personally if you can afford to maintain the mortgage & rent to the HA without letting out, I would certainly prefer this (with regular visits). You may also have to re-jig your buildings insurance if you do leave it unoccupied in excess of 30 days, and I would leave my contact number with a neighbour for emergencies.

But if priced well, hopefully it shouldn't be on the market for too long ...

Hope this helps .... wish you well

Holly x

K1RST1E_2

Thanks for you responses.

Holly Hobby - "This is fraught with issues, and personally if you can afford to maintain the mortgage & rent to the HA without letting out, I would certainly prefer this (with regular visits). You may also have to re-jig your buildings insurance if you do leave it unoccupied in excess of 30 days, and I would leave my contact number with a neighbour for emergencies."

This would be our first choice as even though we can afford to have 2 mortgages running at the same time, my sister in law is no rush for the money so is happy for us to move in and not pay her until our house has sold. However, the HA have told me that we can't do this. They have referred me to a clause in the lease which indirectly means that we can't leave the house unoccupied at all.

The clause is 'Not to do or permit to be done any act or thing which may render void or voidable any policy of insurance on the Premises'

The Housing Officer I am contacting regarding our situation has informed me that if the house is unoccupied this causes the buildings insurance to be void. I hadn't really looked into that and didn't challenge it either. Do you think I should?

Thanks x

fed_up_and_stressed

The other issue with Subletting that hasn't been mentioned is you may be putting off potential buyers by having a sitting tenant.

K1RST1E_2

fed_up_and_stressed wrote: »

The other issue with Subletting that hasn't been mentioned is you may be putting off potential buyers by having a sitting tenant.

I agree. To be honest, I really don't want to sublet the house but I feel as though the HA are forcing us into buying the other half of the house just so we can move out as they won't allow us to leave it vacant whilst selling.

We are marketing the house at full ownership too and all the interest we've had has been for shared ownership. A house down the road from us exactly the same has been on the market for 15 months at full ownership so I kind of feel that we'd probably sell it quicker as a shared ownership property than we would at full ownership. We've already had 2 offers on the property which then fell through as they couldn't get the deposit together.

holly_hobby

As noted in my earlier post, b&c cover is generally invalidated if the property is regularly left unoccupied in excess of 30 days - however you can obtain specific bld insurance policies that do cover extended period of absences (ie in excess of the the pivotal 30 day period discussed).

So, no, blds ins is not necessarily invalidated, however which policy you can use will come down to the clauses within the current provision.

If you do need to effect "unoccupied property" insurance, this will be at a higher price point that standard cover, but thats a given due to the issues re unoccupancy (ie in the event of a burst/leak, not being discovered for several weeks).

If you google "unoccupied property insurance", you'll see a whole range of providers, and comparision sites come up.


Hope this helps

Holly

K1RST1E_2

Thanks Holly. I'm going to request a copy of the buildings insurance from the HA. Changing the insurance to a vacant property is a no go as reading the lease they have also added that we are prohibited from doing anything that would cause the premium to increase.

I can see us having to stay here until it's sold unfortunately! Bloody shared ownership!!! We can't sublet, we can't leave it unooccupied. There's not a lot we can do!

getmore4less

K1RST1E wrote: »

Thanks Holly. I'm going to request a copy of the buildings insurance from the HA. Changing the insurance to a vacant property is a no go as reading the lease they have also added that we are prohibited from doing anything that would cause the premium to increase.

I can see us having to stay here until it's sold unfortunately! Bloody shared ownership!!! We can't sublet, we can't leave it unooccupied. There's not a lot we can do!

How far apart are these places? is it convenient to travel between them.
(guessing from the first post no more inconvenient than the current travel to work/nusery).

Move into the other house and have someone/all come back once a week overnight or two or for viewings etc.

Probably best to leave it looking like someone is living there can make selling easier.

Council tax may be an issue a lot of councils no longer allow nill rate periods you could register one at each place for a while to get single discount.

Longer term thre may be CGT issues if you keep this as you main residence


There is probably nothing you can do about the policy if the HA have aranged it(is it a block cover over morethan one residence like a block of flats?)) but.


However, the HA have told me that we can't do this. They have referred me to a clause in the lease which indirectly means that we can't leave the house unoccupied at all.

The clause is 'Not to do or permit to be done any act or thing which may render void or voidable any policy of insurance on the Premises'

The Housing Officer I am contacting regarding our situation has informed me that if the house is unoccupied this causes the buildings insurance to be void. I hadn't really looked into that and didn't challenge it either. Do you think I should?


Think about it if you took this literaly you could not go on holiday or even all go out for the day.

There will be a clause in the policy that allows the place to be vacant for periods, often 30day, I have seen 60 days in policies.
Our current one (direct line) is 60days.


One advantage of starting to use the inherited place immediately even if only occational is you can get normal insurance cover for that.


It is none of the HA business if you have other properties or family that you use/visit on occations..


Back to my first post check the lodger situation might be a way to get some money in.

K1RST1E_2

getmore4less wrote: »

How far apart are these places? Is it convenient to travel between them. (Guessing from the first post no more inconvenient than the current travel to work/nusery).

It's not far at all. A 15 minute drive on a good day. One of us would be back at least once a week anyway just to open the windows, dust and vacuum to keep the place nice for viewings.

getmore4less wrote: »

Think about it if you took this literaly you could not go on holiday or even all go out for the day.

There will be a clause in the policy that allows the place to be vacant for periods, often 30 days. I have seen 60 days in policies.
Our current one (Direct Line) is 60 days. It is none of the HA business if you have other properties or family that you use/ visit on occasions ...

I've replied to the HA's last e-mail requesting a copy of the policy. I had a look at a standard one from Halifax which states their definition of 'unoccupied' and what to do if the property is to be unoccupied for more than 30 days. There seems to be a way around it so if the policy they have taken out is a standard one, I may be able to challenge what they are telling me.

I have also mentioned that if the policy states we can't leave our current house vacant whilst it is still up for sale, then we are prepared to pay for an additional buildings insurance for a vacant property to cover that time if we are permitted to.

getmore4less

Why would you leave it vacant when you can just stay in both places some of the time.

I think you are digging yourself into a hole if you keep going down this route.

Just get the new place insured and live there most of the time returning to the HA place every now and then.


The usual unoccupied restriction are keep the heating on or drain and shut everything down, you will probably want to keep the place damp free and warm for selling anyway so will need the heating on so just occupy.