Letting a Property

Habib2342

Hi,

I'm looking to let out my brother's property as he's been hospitalised due to ill health. his lender is nationwide and they've stated on their website they will not charge anything for the first 6 months that the property is let. if the property is still let after 6 months they will add an extra 1% onto the monthly mortgage payment.

To let, they said we have to fill out a permission to let form. Am I committing mortgage fraud by not telling them the property is let and thus avoiding the 1% mortgage hike after 6 months ? as long as they tare getting their payments, there's no reason for them to check ? they are not going to send someone out to the property to check who is living there ?

Just want to check I am playing by the rule bok to avoid any nasty surprises later on when it comes to selling .

thanks,.

Tom99

You need permission from Nationwide before letting so you are not playing by the rule book.

flashg67

They may be unlikely to check, but what if they did - apart from the mortgage hike, you'd likely lose consent to let, which would prove difficult if you have a tenant in place. The 1% hike doesn't sound too excessive. If it will be long term, you could look for a proper BTL mortgage

davidmcn

The tenant might want to check, if they've got any sense. They'll certainly have reason to get suspicious once the Nationwide's mail starts arriving.

And since you're considering fraud, what authority do you have from your brother to deal with his property on his behalf?

csgohan4

What does your brother have to say about it? I presume you want a cut of the profits if any? Are you part of the mortgage as well?

getmore4less

Do you have POA.

davidmcn

getmore4less wrote: »

Do you have POA.

The OP's previous thread suggests they don't have any legal authority (unless something has changed in the last three weeks). In which case they're not in a position to get consent from the lender or let out the property.

https://forums.moneysavingexpert.com/discussion/comment/73437231#Comment_73437231

Keep_pedalling

davidmcn wrote: »

The OP's previous thread suggests they don't have any legal authority (unless something has changed in the last three weeks). In which case they're not in a position to get consent from the lender or let out the property.

https://forums.moneysavingexpert.com/discussion/comment/73437231#Comment_73437231

That thread also said the brother was improving, where will he go on his discharge if there is a tenant in his flat?

This seems a no goer all round.

tlc678910

Hi OP,
I would get the correct permission from Nationwide and pay the extra as it becomes due. The worst consequence I can think of would be if the house insurance used a lack of permission to refuse a major claim. That could leave you up the creek if the place burned down for example. I appreciate you will need your brother to be in agreement/sign off letters etc.

Will the rent you receive cover the mortgage? If not is it still affordable (I see in your previous thread your mum helps with these payments). Is the flat in an area where you can find a "good" tenant? A bad/non paying tenant will compound your problems. If you can (afford to) I would recommend finding a good agent who can help you ensure you comply with all the letting laws. An agency that you feel is ethical and not greedy. We use a good agency - so I'm not being sarcastic. No phantom tenant renewal fees instead of periodic tenancy etc.

You (your brother) will need to do a tax return I think (not totally sure if under tax threshold and not sure of the effect of rental income on benefits - only mortgage interest is deductable as an expense (for lower rate tax payers anyway) and not capital repayments on a repayment mortgage so there could well be some income to declare.

For information we have consent to let with Nationwide and after the initial 3 years they wrote to us to say that if our circumstances remain the same they will grant us a further 3 years. Our property is rented out and we rent elsewhere.

I respect the fact you are trying to help your brother hang onto his home. When his crises passes and he is ready it would be great if he had the choice to return to his home.

Good luck Tlc.

BobQ

OP, as has been said in various ways you can do nothing without your bother's agreement to allow you to act for him and Nationwide's permission to let. Not to have both of these will create many issues for you and your brother.

Nationwide will probably not find out about it unless something goes wrong or the tenants check. A tenant can spend about £5 to get a copy of the Land Register entry. That will say who owns the house and any loans secured on the property. Even if they do not ask many letting agents will ask if the property is mortgaged and whether there is permission to let. In that event Nationwide would probably not evict the tenant if they had acted in good faith, but they might impose a higher interest on your brother and after the tenants left they might require you to re-mortgage.

Insurance will also be another issue since you will need their agreement in effect as the insured needs to declare who is living in the home and attest that they have no relevant convictions. As you should realise it does not take much for an insurer to declare your insurance is invalid. Another issue is that if there was say a leak, fire or other major event your brother would need this insurance (I presume) to make the house habitable asap.

And then as has been said there is the need to declare the income to HMRC.

csgohan4

To be quite frank, stop thinking of ways to benefit off your brother's misfortune and help nurse him back to health, not worrying about how to make a quick buck.