Finding a lender who allows you to rent a room

tinkerbel

Hi all,
I am looking to buy my first flat and would like to rent out a room, to a lodger, to make use of rent a room relief.

I have just had a Chelsea/YBS mortgage application rejected because of the intention to let..

I've looked online a lot and am struggling to find lenders will allow you to rent out a room.

Does anyone have any suggestions of lenders which allow them to rent a room out? Or any suggestions of where to look? There are a lot of people renting out rooms.. So there must be lenders which allow it!!

Thanks in advance..

booksurr

are you sure you are answering the right question?

there is a big difference between:
a) do you intend to let the property, and
b) do you intend to take in a lodger

as per at least one post in the last hour mortgages for lodgers are available

HappyMJ

tinkerbel wrote: »

Hi all,
I am looking to buy my first flat and would like to rent out a room, to a lodger, to make use of rent a room relief.

I have just had a Chelsea/YBS mortgage application rejected because of the intention to let..

I've looked online a lot and am struggling to find lenders will allow you to rent out a room.

Does anyone have any suggestions of lenders which allow them to rent a room out? Or any suggestions of where to look? There are a lot of people renting out rooms.. So there must be lenders which allow it!!

Thanks in advance..

Renting a room to a lodger isn't a problem. You can't use the income from a lodger to qualify to borrow more money but you can have a lodger. Maybe you answered the question wrong as they don't disallow a lodger.

If you answered that you had an intention to let the property out they may have thought you wanted the property to only let rooms out and not actually live in it which would lead to a decline.

Surrey_EA

It would surprise me if many people applying for a mortgage disclosed to their prospective lender that they intended to let a room out.

orcocan

did they reject it because you included the income you'd make from renting a room to a lodger as part of your income? If so I think no lender would allow that.

Most (all?) lenders would not have an issue with you having a lodger as long as the mortgage is affordable even when you don't

G_M

Your application to Chelsea was rejected because you used the word 'let'.

And some pen-pusher assumed you were going to let the property. the whole property. For that you'd need a Buy To Let mortgage.

You intend to rent out a room to a lodger. You don't need permission. Just do it.

LODGERS (Licencees/Excluded Occupiers)
A lodger (broadly) lives in the same property with their resident landlord, and shares facilities. Unlike tenants, lodgers have few rights.

The Housing Act 1988 provides definitions of 'Resident Landlord' and 'same property' (S31 & Schedule 1 (10).

There is advice for landlords considering taking in lodgers here:

LodgerLandlord (21 tips from solicitor Tessa Shepperson + General information site)

Landlordzone (Various articles on taking in lodgers)

Renting out rooms in your home (Government info)

Rent a Room Scheme (Government scheme for tax-free income from lodgers)

tinkerbel

Thanks for the quick replies.
The online form I filled in asked "do you intend to let all or part of the property?" I put yes and under "more details" explained it would be a lodger. I then received an email declining my application on the basis I intended to let part of the property to a lodger. I spoke to them on the phone now to clarify and they said none of YBS Group's mortgage products allow lodgers..

We don't need any of the income to afford the mortgage, so no income has been included in any calculations, it is just an idea at the moment.

Any ideas of any lenders to try next? I don't want to completely wreck my credit rating my getting mortgages declined for this kind of reason!

I saw the other rent a room thread but didn't want to piggy back as the problems/questions were a bit different.

G_M

I'm very surprised.

However, the solution is to either

a) use a mortgage broker, who will know the lending criteria of different lenders or

b) select another lender yourself, and either go in and discuss, or phone them, before applying.

or c) don't mention it.

I stiil suspect Chelsea have in mind a formal tenancy agreement, albeit for part of the property, rather than a lodger agreement.

HappyMJ

tinkerbel wrote: »

Thanks for the quick replies.
The online form I filled in asked "do you intend to let all or part of the property?" I put yes and under "more details" explained it would be a lodger. I then received an email declining my application on the basis I intended to let part of the property to a lodger. I spoke to them on the phone now to clarify and they said none of YBS Group's mortgage products allow lodgers..

We don't need any of the income to afford the mortgage, so no income has been included in any calculations, it is just an idea at the moment.

Any ideas of any lenders to try next? I don't want to completely wreck my credit rating my getting mortgages declined for this kind of reason!

I saw the other rent a room thread but didn't want to piggy back as the problems/questions were a bit different.

You aren't letting part of the property to a lodger so the correct answer is no.

Letting part of the property implies to me that you are giving them exclusive occupation of part of the mortgaged property which you aren't. You have the right to enter a lodgers room at any time. You can move the lodger to another room if you want...you can even kick them out there and then with no notice whatsoever.

Bossypants

HappyMJ wrote: »

You aren't letting part of the property to a lodger so the correct answer is no.

Letting part of the property implies to me that you are giving them exclusive occupation of part of the mortgaged property which you aren't. You have the right to enter a lodgers room at any time. You can move the lodger to another room if you want...you can even kick them out there and then with no notice whatsoever.

Exactly this.


When they talk about 'letting part of the property', they are typically thinking about a larger property, like a farm, where it would be conceivable that you might want to formally let a portion of it, for example a field or an outbuilding.

jbainbridge

As per G_M's reply the correct answer is c) don't mention it.