Consent to let on a new mortgage - first time buyer

Dave_the_Ginger_Cat

Marco_Brandon wrote: »

So as long as I move in myself, and then subsequently take on rent paying lodgers whilst still remaining in the property, I am not breaking any law or rules? I like the sound of that, might actual go ahead with it. Now I need to look into getting a multiple occupancy license *sigh*:

Some things to bear in mind

1) You don't need a Multiple occupancy licence in England and Wales unless it meets this: (lifted from www.gov.uk)


A house in multiple occupation is a property rented out by at least 3 people who are not from the one ‘household’, eg a family, but share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’.
You must have a licence for your HMO if it’s:

• rented to 5 or more people who form more than 1 household
• at least 3 storeys high

Even if your property is smaller and rented to less people, you may still need a licence depending on the area. Check with your council.

2) You need to get specialist insurance - most insurers will not insure contents if you have lodgers

3) You need to pay tax if you'll earn more than £4,250 per year from this. Read up on Rent a Room on the revenue's site.

Marco_Brandon

Yorkie1 wrote: »

I think that would be fine.

You won't be able to use the lodger income as a basis for the mortgage application, though, in case that was what you were thinking.

How many lodgers would you intend to take on, and why do you think you'd need a HMO licence?

Oh no. The mortgage has been agreed based on our employment income only. It's been agreed, so just waiting on paperwork now.

I intend to take the smallest room in the house, and rent out the remaining to bedrooms to 2 lodgers.

I had a quick chat with a letting agent and he said that the borough (Havering) may require you to obtain a license first. I'm looking into that as we speak.

Marco_Brandon

Dave_the_Ginger_Cat wrote: »

Some things to bear in mind

1) You don't need a Multiple occupancy licence in England and Wales unless it meets this:


A COLOR=#0000ff]house in multiple occupation[/COLOR][/URL] is a property rented out by at least 3 people who are not from the one ‘household’, eg a family, but share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’.
You must have a licence for your HMO if it’s:

• rented to 5 or more people who form more than 1 household
• at least 3 storeys high

Even if your property is smaller and rented to less people, you may still need a licence depending on the area. Check with your council.

2) You need to get specialist insurance - most insurers will not insure contents if you have lodgers

3) You need to pay tax if you'll earn more than £4,250 per year from this. Read up on Rent a Room on the revenue's site.

Hey,

Agreed.

1) I think by definition I won't meet the conditions to need an HMO? I intend to take on two rent paying lodgers. But I think the Borough of Havering does force you to have one regardless. Still looking into it as we speak.

2) I'm happy with getting the appropriate insurance, regardless of cost.

3) I'm aware of the tax rules around the rent a room scheme (I'm a tax adviser). Unfortunately expenses will not be deductible under this scheme. Need to do an analysis on what's better i.e. rent a room scheme or elect to pay tax on all income but be eligible for deductions on expenses incurred. Where's my calculator when I need it?

GwylimT

Yes it would be naughty, some insurers also ask to have proof from your lender that you have permission to rent.

You don't need a HMO, so Havering council can shove that up their !!!! really as you only need a HMO in a home of three or more floors housing two or more households comprising of five or more people. That information is available on your councils website. There are discretionary HMO's, these are normally for areas where the house is under three story and will have fewer than five people from two or more households where the property is in a disadvantaged area, or an area with a high crime rate and a high rate of empty properties.

http://www.havering.gov.uk/Pages/FAQ.aspx?lgsl=716

Marco_Brandon

GwylimT wrote: »

Yes it would be naughty, some insurers also ask to have proof from your lender that you have permission to rent.

You don't need a HMO, so Havering council can shove that up their !!!! really as you only need a HMO in a home of three or more floors housing two or more households comprising of five or more people. That information is available on your councils website. There are discretionary HMO's, these are normally for areas where the house is under three story and will have fewer than five people from two or more households where the property is in a disadvantaged area, or an area with a high crime rate and a high rate of empty properties.

---

Oh wow! Therefore in conclusion I do not need an HMO. Don't need a discretionary HMO either even though the property is under three stories occupied by fewer than 5 people from two or more households, but the location is "not" a disadvantaged area in every sense of the word. Crime rate is pretty standard.

Would it be advisable to let my mortgage lender know that I intend to take on lodgers then? Personally I don't see any reason to because myself and the missus can afford payments in full anyway, but having lodgers makes it even easier and more secure.

GwylimT

Have a look at the conditions at your mortgage, I doubt you would need to tell your lender but you must check anyway.

If you click on the link it has everything you need to know about HMO's and as it is Haverings very own site they cannot then force a HMO when they themselves say it isn't needed, its just an easy way to make money.

Marco_Brandon

Thank you all so much. This has been very enlightening!

SuzieSue

Marco_Brandon wrote: »

GwylimT wrote: »

Would it be advisable to let my mortgage lender know that I intend to take on lodgers then? Personally I don't see any reason to because myself and the missus can afford payments in full anyway, but having lodgers makes it even easier and more secure.

You will need to tell your insurance company (and you might need to tell your lender).

mrluke

Rather than all this hassle , pop to a registry office and get married.

Job done , nice and cheap also !

Marco_Brandon

mrluke wrote: »

Rather than all this hassle , pop to a registry office and get married.

Job done , nice and cheap also !

If that was up to me I would do exactly that.