Consent To Let : Birmingham Midshires

Misteeq

Hi All,

I am new to the forum board and would like some advice please.

I live in the North East of England, and my job is being re-located to London, which is not a problem at all.

I have a small one bedroom house, which I have had for 9 years, and the Mortgage lender for the past 6 years has been Birmingham Midshires. I have never missed a payment and have a good credit score etc.

The intention was to sell my house, but as the house prices have dropped so much, after 3 recent valuations, I only have about £1k equity in the propertly now, which isn't great.

So, what a lot of people have advised me to do is to try and keep my house as a long term investment for the future - which I have now decided to do.

I phoned Birmingham Midshires (annonymously)to ask whether a consent to let can be agreed in these circumstances, and they replied No as their main business now is Buy to Let Mortgages. (They no longer offer residential mortgages).

I enquired on whether I could change my current 'interest only' residential mortgage to a Buy to Let and the answer was again No as I do not have a LTV of 75%.

I have been doing lots of research this weekend, and it would seem that a new regulation came out in 2012 which states that "no lender can now refuse a reasonable request" for a consent to let - particularly in my circumstances.

My question is - is this true?

I am more than happy to convert to a Buy to Let, as I really want to do everything above board - but it would seem that I can't do that either - even though I am happy to pay the extra increased rate of interest.

Obviously the 'Consent to Let' would be the ideal solution for the time being as this would mean no change in the interest rate.

My mortgage repayments are £254.00 per month, and I can rent it out for £400.00 per month. I am planning to re-pay an extra £100.00 per month as an 'overpayment' on the mortgage repayments too.

My other question is - where do I go from here? Do I make a formal application for 'Consent to Le't based on the new regulation that came into force in 2012, or does anyone have any other ideas on how best to approcach this?

The other solution is to rent it out without consent as thousands of other people are doing. But, this is definitely not the route that I want to go down as it is mortgage fraud and the consequences of this can be terrible.

As I now want to keep my house as a long term investment for the future, I would like to keep everything about board.

Any advice and recommendation on how best to approach Birmingham Midshires again would be most helpful.

Many thanks in advance for your help.

kingstreet

The transitional arrangements announced in October 2012 you refer to which were a precursor to the MMR do not mention consent to let in any way.

They are designed to assist mortgage prisoners by removing the need for affordability calculations where there will be no increase in the amount being borrowed.

Consent to let remains a contractual alteration at the discretion of the lender.

Scuttler78

I have considered this as a potential option if I can't sell my house. If you aren't going to get a buy to let mortgage from your current lender or any other lender, then your options are either to stay put, move and continue to pay the mortgage on an empty property, move, rent it out but don't tell your mortgagor or put it up for sale. What I know from reading these boards is that the advice always seems to err on the side of caution. I probably would take a more pragmatic approach in terms of weighing up the risk against potential benefit.

xylophone

Is there any possibility that you could remortgage to a BTL with another lender?

Perhaps a mortgage broker might come up with an offer?

mrginge

You can't force a lender to subsidise a letting business.
They can however, ask you to repay your mortgage if you breach the terms of the agreement.

Gaining consent to let does not automatically mean that your interest rate does not increase.

Aside from that, i don't think £150/mth gross profit is too hot tbh given you then have to pay tax, presumably a management fee, insurance, cover voids etc...
Just sell it.

mrginge

Scuttler78 wrote: »

What I know from reading these boards is that the advice always seems to err on the side of caution. I probably would take a more pragmatic approach in terms of weighing up the risk against potential benefit.

The issue is that the risk is not all taken by the homeowner. By not gaining ctl or moving to btl then any tenant is put at risk due to potentially invalid insurance and by a lack of security of tenure.
Plus of course, that tenant might just decide to inform the mortgage lender.
Or the lender might find out anyway through the multitude of checks they can and do perform.

The advice is therefore to do things correctly.

Misteeq

Many thanks for your replies.

I seem to be a bit stuck at the moment, as I want to do everything above aboard - but I can't get a BTL from anyone - includng Birmingham & Midshires as I only have £1K equity in the property. Every mortgage lender wants a minimum of 75% LTV which I don't have.

If they won't issue a consent to let, then I don't really know what to do?

I definitely don't want to go down the road of renting it without consent.

Does anyone else have any other suggestions as I don't want to sell it and I don't have any other surplus cash to to be in a position to re-mortgage to another lender for a BTL.

Many thanks.

Sarah

mrginge

Looks like you're going to have to do something you don't want to i'm afraid.

Why don't you want to sell it?

kingstreet

xylophone wrote: »

Is there any possibility that you could remortgage to a BTL with another lender?

Perhaps a mortgage broker might come up with an offer?

There's no equity in the property.

Scuttler78

You are going to have to make a tough choice. As I said, you will need to weigh up the potential risk against the benefit and decide for yourself whether it is worth the risk. Speak to other people who have been in similar positions and see what they have done. I know people who have taken a range of different decisions in your situation, for most it has worked out either by cutting their losses by selling up or by living with the risk of renting without permission. If you are not the sort of person who can live with the risk then you will have to sell up if you can't afford to keep it on. Either that or ask a family member to invest some cash to build up the deposit for a buy to let mortgage.
As long as you are aware of the risks then as an adult you can make that decision for yourself.

franklee

Once a tenant is installed the OP can't just be kick them out if the lender finds out. That would lave the OP paying any penalties the lender wants to impose during the months it takes her to evict the tenant. Unless the lender repossess. A tenant should take in interest in this as an unauthorised let affects their rights should the landlord get repossessed.

That some other people have got away with so far it is irrelevant. Perhaps they've got the cash to back them up and can remortgage elsewhere should the lender object. However the OP hasn't enough cash to have this plan B.

If the OP is going to use a letting agent they (if they are decent) should ask for proof of consent to let. The OP could use an agent who isn't reputable but then would they do the rest of their job properly?

Misteeq it look to me like you can't afford to let the property out. Apart from not having enough equity, do you have savings to cover the mortgage when the property is empty or the rent unpaid? Can you afford repairs, insurance, gas service, tax etc. If an agent is to manage the property what is their fee?