Friend intent on renting property without informing mortgage company

Prothet_of_Doom

Given the NEW rent a room tax breaks, he might be better, renting a room to a lodger, and occasionally staying over one random night a week, to prove he's in residence.

Assuming a 2 bed flat, and depending on layout, he could rent out the lounge and the double bedroom, and just stay in the box room for that one night.

I did some sums on a flat I looked at and I reckoned that with two people renting at an all inclusive rent, I'd cover interest and all utilities and council tax. But I also decided that there were easier ways to make money, but in your mates case, it would mean he is not breaking the terms of his loan, and he can wait for the equity to improve before he decides to sell (or re-mortgage it as a BTL once he has 25% equity)

ARW1986

It's a one bed flat unfortunately, otherwise that would be a great shout. ����

Prothet_of_Doom

ARW1986 wrote: »

It's a one bed flat unfortunately, otherwise that would be a great shout. ����

How hard would it be to separate the lounge from the kitchen with a false wall, or split the lounge into 2 to make a box bedroom ?

ARW1986

Prothet_of_Doom wrote: »

How hard would it be to separate the lounge from the kitchen with a false wall, or split the lounge into 2 to make a box bedroom ?

It's one of those great location, not great size flats. The lounge and kitchen are already separated but the lounge couldn't cope with being downsized. If he had capacity for that, the new lodger bill would be perfect.

xHannahx

As for the mortgage, they won't find out unless someone tells them, or he falls into arrears and they send a field agent/debt counsellor out to the property. The other way of getting caught out is the tenant returning mail to sender.
He will be in breach of terms so if they found out they could call in the whole balance.
I can't speak for HSBC but the company I formerly worked for would send a letter telling the borrower they were breaching terms and then do nothing about it as long as they were getting their money.

The main implications is building insurance and tax. specialist building insurance is required which may be difficult to obtain when don't have consent to let.

ARW1986

That's really helpful Hannah thank you.
I will try to convince him to take the honest route but can see why so many people would consider it as a good idea. I'm planning to rent my property in a few years but would have to do it the right way otherwise I'd be worried about the repercussions day and night!

amnblog

You are wasting your breath Andrew.


Your friend clearly has a cavalier attitude to life whereas you are much more conservative.


Let him make his own mistakes and keep out of it - you wont get any thanks for trying to make him something you he is not.

ARW1986

As long as I have done what I feel is right in terms of ensuring he is aware of the risk I'll be happy.