No consent to let - Direct Line Insurance

bobby_davro_2

Hello, i don't have consent to let from Halifax, but will be renting out my house to tenants. Clearly i need to move to a landlord insurance, so following recommendations from other threads i have gone with Direct Line.

However, looking through the documentation, it has a section of Mortgages that states

"Mortgage
The act or neglect of any mortgagor, leaseholder, lessee or
occupier of any Building insured by this Policy whereby the risk is
increased without the authority or knowledge of any mortgagee,
freeholder or lessor will not prejudice the interest of the latter
parties in this insurance provided they notify Us immediately
on becoming aware of such increased risk and pay an additional
premium if required."
Full link to policy - http://www.directlineforbusiness.co.uk/pdf/landlord-insurance-policy-dlfb56.pdf

What does the above mean? Does this mean the mortgage company need to be aware of increased risk?

Also, when i filled the form online, there was a section for other interested parties. I didn't understand what this meant, so left blank. But is this where i should have put Halifax?
Should i notify them separately or will Direct Line do this?

Hope any of you guys can help.
Thanks

kingstreet

Are you planning to request consent to let from Halifax?

harrys_dad

Renting out your house without the permission of your mortgage lender is fraught with dangers. I trust you can answer Kingstreet's question with a "yes".

theartfullodger

Consider it like this...

You've decided to break the terms of your mortgage contract with Halifax & not ask them for permission to rent the place out...

So you clearly are happy with people breaking the terms of their contract & not sticking to what the agreed & signed for..

Why on earth would you expect anyone else to want to do business with you??

Would you now be happy if your tenant doesn't stick to the terms of his contract ?? eg doesn't pay rent, wrecks the place??

What goes around comes around...

How's the old car insurance?? Not told the insurer you only do 3,000 miles a year when you actually do 20,000 but got a cheaper deal???

Cheers!

G_M

bobby_davro wrote: »

Hello, i don't have consent to let from Halifax, but will be renting out my house to tenants.
I strongly urge you to obtain CTL, or switch to a BTL mortgage.
Clearly i need to move to a landlord insurance, so following recommendations from other threads i have gone with Direct Line.

"Mortgage
The act or neglect of any mortgagor, leaseholder, lessee or
occupier of any Building insured by this Policy whereby the risk is increased without the authority or knowledge of any mortgagee, freeholder or lessor will not prejudice the interest of the latter parties in this insurance provided they notify Us immediately on becoming aware of such increased risk and pay an additional premium if required."

I believe it means that if you increase the risk on the property without your mortgage lender knowing, the mortgage lender's interest in the policy will remain, as long as they (the lender) tell them(the insurance company) as soon as they find out (and pay any premium increase).

Full link to policy - http://www.directlineforbusiness.co.uk/pdf/landlord-insurance-policy-dlfb56.pdf

What does the above mean? Does this mean the mortgage company need to be aware of increased risk?

Also, when i filled the form online, there was a section for other interested parties. I didn't understand what this meant, so left blank. But is this where i should have put Halifax?
Yes

Should i notify them separately or will Direct Line do this?
You should apply for CTL and inform them of your new insurance policy.

Hope any of you guys can help.
Thanks

New Landlords (general information for new or prospective landlords)

BitterAndTwisted

Only a bloody fool would go ahead and let their mortgaged property without their lender's consent. A savvy tenant is likely you check whether you have a BTL mortgage or your lender's consent, and many sensible agents will ask you to prove it.

dacouch

It basically means the mortgagee will not lose out financially if the mortgagor increases the risk of a claim providing the mortgagee notifies the Insurer as soon as they are aware of any increased risk of a claim and agree to pay and resultant additional premium.

It's an "invalidation clause" you should read it in context by also reading section 11 on page 11.

http://www.directlineforbusiness.co.uk/pdf/landlord-insurance-policy-dlfb56.pdf

Your mortgage company are likely to twig you're renting the property out when / if they receive details of the Direct Line policy or policy number.

bobby_davro_2

Unfortunately bought the house in 2007, so no equity to move to BTL and the costs to move to CTL from Halifax is extortianate. (currently on SVR)

Still not 100% sure what that mortgage paragraph means. Who is expected to pay the additional premium to direct line. Myself or Halifax? How could it possibly be an increased risk to the insurance company if there is consent or not from Halifax.

As Direct Line do residential and LL insurance, i'm hoping it goes under the radar if it ever gets placed on file.

sulphate

Your concerns are somewhat of a moot point if you are unable to let your property as it has already been mentioned it is possible for tenants to check the mortgage status and many letting agents will request proof that you have permission from Halifax.

[Deleted User]

bobby_davro wrote: »

Unfortunately bought the house in 2007, so no equity to move to BTL and the costs to move to CTL from Halifax is extortianate. (currently on SVR)

Then you should sell the house and move on.

CTL does not just exist to extort money from you, it is an important part of the mortgage system. If you cannot afford CTL then you cannot afford to be a landlord. What happens when your tenant does not pay for 3 months and when you finally have the tenant removed by bailiffs you find the house to be uninhabitable and requires 3 further months of renovations? Are you able to afford a void of that long, or longer?

You're committing mortgage fraud, not only is it immoral it means your mortgage lender could either require you to repay the entire value of the mortgage (which will force a sale) or demand you pay for consent to let and the amount that you did not pay by avoiding applying for consent to let when you started letting the property.

You put your tenant in a bad position and saying your bank is being "extortionate" is ridiculous, it's the cost of doing business. Landlording is a business, act like a business person if you're going to run a business. Fraud is not good.

I've been a tenant in a property that did not have consent to let and it's not fun, I was very unsure if I was going to be homeless at one point because repossession was being started by the bank, fortunately for me my landlord got his head out of his !!!! and arranged to repay what he owed and the consent to let fees. There is no excuse to ever put a tenant in that position, it's really disgusting behaviour.

Mortgage providers have an easy time finding out about situations like this, one letter to "your house" and a nosey tenant and it all falls apart.

franklee

bobby_davro wrote: »

Unfortunately bought the house in 2007, so no equity to move to BTL and the costs to move to CTL from Halifax is extortianate. (currently on SVR)

Still not 100% sure what that mortgage paragraph means. Who is expected to pay the additional premium to direct line. Myself or Halifax? How could it possibly be an increased risk to the insurance company if there is consent or not from Halifax.

As Direct Line do residential and LL insurance, i'm hoping it goes under the radar if it ever gets placed on file.

I'd have thought that when you live in the property the mortgage will likely be paid as the calculations were done based on your salary.

If you let out on the tight budget you mention and you get a void or non-paying tenant I can see you may fall into mortgage arrears as you will need to be paying both the mortgage and the extra costs for you to live elsewhere. That may bring an increased risk of repossession. Perhaps repossession increases the likelihood of damage to the property? (Maybe from a disgruntled tenant being chucked out during their fixed term due to it being an unauthorised tenancy). You could try asking Direct Line insurance if they mind your not having consent to let from Halifax I suppose.

On the other hand if Halifax granted consent to let presumably they think the let is
viable and that you can afford to let so less risk all round.

However if Halifax find out you let without consent I'd suspect they will impose charges of some kind due to the increased risks to them. If you can't afford the extra charges then you start falling into arrears. You were discussing consent to let on here in early 2012 so as you haven't got it thus far, did you let back then in the end?

Even if it all goes under the radar the tenant may find out as citricsquid posted. A lack of CTL affects the tenant. Any decent letting agent should check for CTL before taking the property on so if using an agent you'll end up with one who doesn't mind cutting corners, or is ill informed.