Cynical consent to let rule changes?

CloughaSW

Afternoon All,

I'm trying to get a second period of consent to let from HSBC but have been told that it may not be granted without changing my mortgage to a BTL - which might actually make the whole letting exercise pointless since all I want to do is cover my costs.

I'm not a landlord with a "portfolio" of properties, I have one that I mortgaged myself but I've now moved in with my partner - a common occurrence in modern society I'd expect.

I've read about the higher BTL rates making up for the perceived extra risk of a rental shortfall. But given that people can't buy as easily as they used so rental properties are popular and the fact that any sensible landlord will have some kind of insurance to cover the shortfall, this argument seems to ring hollow.

I appreciate that I am fortunate in that I have a property to let out but it wasn't a problem last year so why is it an issue this year?

Am I being overly cynical in thinking that it's just another way for banks to make more money out of us? I am open to being convinced that there's good reason for it.

What are your thoughts and opinions? Has anyone had any recent experience in a similar situation?

Thanks.

Brock_and_Roll

Its more than a perceived extra risk for the lenders, its an actual increase in the risk everything else being equal.

At the end of the day, when the going gets tough a person is always going to be less likely to default on the mortgage for the house they live in rather than one they rent out to others.

Furthermore, tenanted houses are a higher risk when things going wrong as it is much harder for the lender to get vacant possession.

I think the current situation is more a case of banks trying to clean up their act after many years of turning a blind eye. At the end of the day if you let out a house you are running a business and as such your financial arrangements should be business ones.

Foxy-Stoat_3

CloughaSW wrote: »

which might actually make the whole letting exercise pointless since all I want to do is cover my costs.

I think you should sell it now then.

Your rent needs to be 25% more than your mortgage. Assuming you have a residential repayment mortgage then you can afford it to be a little less, but when/if you go on a BTL mortgage you will need a repayment vehicle also.

Thrugelmir

CloughaSW wrote: »

Am I being overly cynical in thinking that it's just another way for banks to make more money out of us? I am open to being convinced that there's good reason for it.

Consent to let is only ever granted as a temporary measure. Such as somebody relocating elsewhere in the country for work or a short term overseas posting.

It's obvious to the lender that this isn't the case now. You are running a business. So is changing the product to the correct one.

anselld

Foxy-Stoat wrote: »

when/if you go on a BTL mortgage you will need a repayment vehicle also.

You don't need a repayment vehicle for BTL mortgage, but yes you do need 125% rental cover.

I suspect when the OP mentioned "cover costs" s/he was including the capital repayment element on the residential. So an interest only BTL may actually be more affordable.