First Direct and Lodgers

nicenspicy

Hi,

I've got a mortgage with First Direct (I'm the sole homeowner) and I'm thinking of getting a lodger. I discovered (by chance) that First Direct allow only one lodger and there must be no written contract. That seems odd to me, but anyway, I have a couple of questions:

1. If there's no contract, what's the difference between a lodger and "anyone else" living in my house?
2. If I have a lodger and my partner moves in, is my partner considered to be a lodger? What if a friend or relative moves in?

I want to avoid any trouble with my bank, and I intend to ask them more about it, but I'd also like the opinions and advice of people with experience of this sort of thing.

Thanks.

redonion

What does the contract wording actually say?

Edit: To clarify, I mean the mortgage contract.

nicenspicy

redonion wrote: »

What does the contract wording actually say?

I can't find anything that mentions lodgers.

redonion

nicenspicy wrote: »

I can't find anything that mentions lodgers.

Well, that makes it nice and simple then, doesn't it? No problem!

As I understand it (I'm no expert), lenders typically prohibit letting to tenants unless you either have a buy to let mortgage, or consent to let. However, a lodger is not a tenant. Lodgers have many fewer rights in law than tenants, and are easier to kick out, so lenders are not concerned about them as far as I know.

redonion

redonion wrote: »

Well, that makes it nice and simple then, doesn't it? No problem!

As I understand it (I'm no expert), lenders typically prohibit letting to tenants unless you either have a buy to let mortgage, or consent to let. However, a lodger is not a tenant. Lodgers have many fewer rights in law than tenants, and are easier to kick out, so lenders are not concerned about them as far as I know.

It seems the word "tenancy" does sometimes apply to lodgers, even though a lodger, in the everyday sense, has much reduced tenancy rights. So it may be worth checking anything in your mortgage contract that mentions "tenant" or "tenancy", also.

Some links:

https://www.gov.uk/rent-room-in-your-home/your-lodgers-tenancy-type

http://england.shelter.org.uk/get_advice/renting_and_leasehold/sharing_and_subletting/lodgers

http://www.lodgerlandlord.co.uk/2010/03/09/the-five-main-differences-between-a-lodger-and-a-tenant/?doing_wp_cron=1379789782.9170739650726318359375

Still, I'd think twice before contacting your lender - it might just cause confusion and bureaucratic wheels to be set in motion, where simply reading your contract and the links above would sort it out.

Edit: you should have a written agreement with your lodger, Shelter's website has sample ones.

nicenspicy

redonion wrote: »

... so lenders are not concerned about them [lodgers] as far as I know.

That's what I thought. And if a bank was so concerned, why not provide its customers with a license agreement that all lodgers must sign?

I'm new to all this and the past few days has confused me a bit. I can't get my head around owning a house, but not being able to choose who may live in it.

nicenspicy

redonion wrote: »

...you should have a written agreement with your lodger...

I'm pretty sure that goes against First Direct's conditions.

Kynthia

Lodgers don't have a tenancy they have a license which gives them very little rights to stay in the property. That is why lenders aren't usually worried about lodgers. Perhaps there is concern with this lender that by signing an agreement with them you'll give them more rights than they're entitled to, such as longer notice or exclusive possession of their bedroom?

Annisele

nicenspicy wrote: »

I discovered (by chance) that First Direct allow only one lodger and there must be no written contract.

How did you discover this? Sometimes call centre staff say things that aren't actually true...

As you say, it does sound odd. If it isn't in the contract, and First Direct didn't tell you, it seems hard to guess how they expected you to know.

redonion

nicenspicy wrote: »

I'm pretty sure that goes against First Direct's conditions.

What does the contract say? Otherwise, we're all just guessing.

redonion

Kynthia wrote: »

Perhaps there is concern with this lender that by signing an agreement with them you'll give them more rights than they're entitled to, such as longer notice or exclusive possession of their bedroom?

I assume that is what is going on, and the solution to that is not to sign something that does that. On the other hand by not writing anything down, you might be leaving room for doubt over the lodger's status. Far better to just make it quite clear in writing.

nicenspicy, I don't think you need to worry. First, taking on a lodger is quite normal. Second, you are already a mile ahead of most of the people your lender has to deal with, who might be clueless about what to sign and get themselves into trouble, because you have the MSE house buying/renting forum at your disposal to read and ask questions.

Do post what's in your contract about tenancy though, because that's what will really sort this out for you, and also help other people considering a FD mortgage (me, for one!).