BTL application and tenancy agreements

tostaky

Hi!

I have a flat that I am renting out to three unrelated person (3 bed flats).
I have a permission to let on that flat.
I want to have a buy to let and release some equity.
I did an application form (via broker) and submitted 3 ASTs (one for each tenant. It was rejected and i was asked to have only one AST with only one name on it. So I talked to my tenants they agreed and we did a new contract showing only one name.
Now the broker wants proof of rent being paid by only one tenant...

:mad:

Do you think that if I do one AST with three names and show the 3 direct debit on my account it will be ok?
Or should I ask the "main" tenant to make a direct debit on behalf of the others? (a bit tricky to ask though...).

Ideally i would prefer the first solution (3 names on the AST) but at the same time, i have been trying to sort out this BTL since october and i really dont want to mess any longer.

What do you think? Thank you

Thrugelmir

tostaky wrote: »

Hi!

I have a flat that I am renting out to three unrelated person (3 bed flats).

Sounds like an HMO. Do you conform to the regulations?

betmunch

Your broker has asked for something very specific I would just get him what he wants or forget the application.

If you want to supply something different then the broker is the person to ask, not an internet forum who dont know the ins and outs of the application.

amnblog

Bet is correct - but a few things to note for you.


Most buy to let lenders want all tenants on one AST.


If you do not have this some lenders will reject the case as you have seen.


This is because multiple tenants on separate AST's bring the property in the realms of multiple occupancy accommodation. Typical examples of this are student accommodation and bed sit type arrangements.


A handful of lenders will consider multiple occupancy and these lenders tend not to have the lowest rates.


The property does not have to be considered a 'house of multiple occupancy' (see below) by the local authority in order for a mortgage lender to consider it as such.


https://www.gov.uk/private-renting/houses-in-multiple-occupation


In your case, even with a single AST, locks on the bedroom doors could be enough for the valuer to consider the property as multiple occupancy and as unsuitable security for the particular lender.


Talk this through careful with your broker before you invest any further time or money. Be upfront and honest and don't try to 'work any angles'.


If it seems clear your broker is unsure - engage another one, as many brokers do not have experience in this area.