Live-in landlord denied?

rpgo

So last summer I bought a 4 bedroom house in south London as a freehold. My first property, with a residential mortgage, also as an investment/retirement fund. I moved in and the idea was to after 6 months, I would ask CTL, rent some of the rooms and be a live-in landlord.

I was always told I could do it after 6 months and all my research seemed to suggest I could. A few days ago I received my CTL agreement and they basically ask me what will be my new address. I called them and clarified I'm trying to be a live-in landlord and I won't be moving from the house. They now clarify that it isn't allowed. I'm only allowed to rent under AST.

I don't struggle with the mortgage by any means, but this throws a spanner in the works as I was looking forward for some extra income and I've been furnishing the house towards renting the rooms.

When you read online, it seems like I could easily fit into the Licence to Ocupy, having lodgers or rent a room scheme at least, no mention that lenders will oppose this in any way as long as you ask permission.

So now I'm stuck with a massive house and I don't seem to work out something to get some extra income out of it. Help please?

Thanks in advance!

AdrianC

If you're living there, and letting rooms, then the people sharing your house are lodgers, not tenants.

You don't need CtL or a BtL mortgage. Just a normal residential mortgage would normally be fine - but obvs check the lender's happy with lodgers.

R-a-R is simply how your income tax is handled.

Don't forget you may well be classified as an HMO, and need licencing.

phill99

As above. You have them as lodgers. Then you have not created any level of exclusivity which the lenders would be concerned about.

sevenhills

rpgo wrote: »

I don't struggle with the mortgage by any means, but this throws a spanner in the works as I was looking forward for some extra income and I've been furnishing the house towards renting the rooms.

When I called my mortgage provider, the Coventry, to tell them I was taking in a lodger, they said I didnt need permision but they noted it on my file.
It wasnt a big deal at all, you can have friends or relatives stay, why not a lodger?

G_M

You have confused them or they have become confused.

For whatever reason they have got the idea you intend to 'let' the property. Hence the offer of CTL. A condition of CTL will always need be under the terms of an AST (Assured Shorthold Tenancy agreement) so that's what they require.

When you said you would be living there too, that meant it could not be an AST, so the CTL terms would be breached!

Having requested CTL, I fear if you now go back and say you want to stay on a residential mortgage (which is what you should have said from the start) but want lodgers, they will get even more confused, or dubious about your intentions. .....

Maybe best move is to do nothing regards them ie don't sign/return the CTL agreement, and don't respond to follow-ups, just stay on the existing residential mortgage.

And quietly get yourself a lodger.


* Lodgers: advice & links for landlords & lodgers

rpgo

Thank you for all the replies.


I always understood a lodger as a type of tenant. I've re-read G_M's link on lodgers and when I end up in the housing act of 1988, resident landlord is definied while drowned in tenant/tenancy terms. At no point lodger is mentioned, so you can see where I got confused.


Wouldn't I need to have a contract with a lodger, or is a gentlemen's agreement enough? And how does that work with insurances? Do I need a special insurance for lodgers?



I understand the house is not technically mine yet due to the mortgage so I can understand the lender requesting to be informed about anyone else living here. If I do get lodgers, do I need to inform the lender in any other way (I only know of CTL for these sort of intentions)?


Thank you very much for your time.

[Deleted User]

Lodgers are not tenants, they are excluded occupiers and based on G_M's guide and common sense it is best to have a written contract.

The house is yours technically, legally and beneficially. The mortgage lender does not own the property at all.

AdrianC

rpgo wrote: »

I understand the house is not technically mine yet due to the mortgage

<grits teeth>
YES, IT IS.

You owned 100% of it from the instant of completion.

You just happen to owe somebody rather a lot of money, which you borrowed to buy it, and which is secured against YOUR property...

rpgo

Heh? So why do people need CTL when letting if the house is theirs? Just in case tenants wreck the house?

AdrianC

rpgo wrote: »

Heh? So why do people need CTL when letting if the house is theirs?

Because part of your contract with the kind people who lent you a lot of money is that they can do that.

They didn't have to lend it you...

[Deleted User]

rpgo wrote: »

Heh? So why do people need CTL when letting if the house is theirs? Just in case tenants wreck the house?

Go wild and read your mortgage documents.