Coop permission to let interpretation

Jabroni

Hi,

I'm after some clarification regarding Co-op's mortgage tariff of charges and, in particular, it's permission to let charges. I'd provide a link but as a new user I'm not allowed..

Copied below are the relevant sections:

Letting a Property with our Agreement – you will be charged a letting administration fee of £59 and if we agree to you letting your property conditions will apply to that agreement including
that you agree to the interest rate you pay increasing by 1%.

Letting a Property with or without our Agreement – our agreement is required before you agree to let your property. If we reasonably believe your property is let without our agreement you
will be charged a letting administration fee of £59 and the interest rate you pay will increase by 1%.

As I understand it, if a mortgagor was to let out their property without the agreement of the Co-op and it became aware of this, in a worst case scenario, assuming landlords insurance did not stipulate permission to let, the mortgagor would simply be required to pay what they would have paid had they sought and obtained permission to let in the first place? If correct, there does not seem to be a great deal of incentive to actually seek permission to let?

Annisele

I think the Tariff of Charges is just that - a list of charges. It doesn't say what the lender will do if the borrower breaches the terms and conditions of the mortgage loan.

So, if you let without permission, then potentially the lender will both charge you more and take action because of the breach - up to and including possession proceedings. If you let with permission, then you haven't breached your contract.

ACG

Financially speaking your spot on. However there is nothing to say they have to grant consent to let. I have known co-op to refuse consent to let when I worked for them.

Jabroni

Thanks for your replies.

@ACG - have you ever known the Co-op to keep the mortgage rate unchanged i.e. without the 1% increase, when permission to let has been sought?

Thrugelmir

Jabroni wrote: »

Thanks for your replies.

@ACG - have you ever known the Co-op to keep the mortgage rate unchanged i.e. without the 1% increase, when permission to let has been sought?

One would of thought unlikely given there is a published tariff,

ACG

No, they would always increase.

Senior_Paper_Monitor

To the last question ... 'not a chance'


Returning to the original one(s) ....


The second section isn't there to offer you an alternative to evaluate - it is there to establish/confirm their entitlement to arrears if/when it is discovered. Once discovered it will demanded and if you can't/won't pay almost immediately you will be into instant mortgage arrears and your credit rating kna******d for the foreseeable future.


Then they will (may) start the whole procedure indicated by Annisele !


"no incentive to seek permission" you say ??

Jabroni

OK, i did the right thing and sought consent to let. After quite a bit of faffing around they eventually sent me a consent application pack which sets out certain requirements. One thing that is confusing me is that as part of the application i must send coop a copy of the assured shorthold tenancy agreement. I rang them for clarification and was told this must be a signed copy of the agreement. Does this not seem a bit backward? Why would i enter into a tenancy agreement before being given consent to let by the bank... The same letter states i should not let the property without the bank's knowledge... Pfff, seems contradicotry. Can anyone offer their thoughts? Maybe the tenancy agreement should include a clause saying subject to being granted consent to let?

ACG

Does it say they want the AST as part of applying for consent to let or do they want a copy once its let out?

Jabroni

It sasy "prior to us agreeing to the property being let the following must be returned to us... A copy of the assured shorthold tenancy agreement" which is in addition to a signed letter confirming acceptance of the increased interest rate. Just seems odd to ask for that before granting consent..

Thrugelmir

Jabroni wrote: »

It sasy "prior to us agreeing to the property being let the following must be returned to us... A copy of the assured shorthold tenancy agreement" which is in addition to a signed letter confirming acceptance of the increased interest rate. Just seems odd to ask for that before granting consent..

Sounds as if in principle they are agreeable to your request. Supplying the documents is a formality.