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paulhutch
Posts: 6 Forumite
Hi
My wife and I have had a residential mortgage for 4 years with a perfect payment history. We are moving to Hong Kong for approx 2-3 years. Some very good friends of ours are going to rent our house. The agreed rent is considerably lower than the mortgage payments which is fine by us as we have somewhere to store our things and also have someone we can trust 100% in the house. The mortgage lender is Northern Rock. They say they, to get a consent to let,
- must have 30% equity
(we have no where near)
-the incoming rent must be 120% of the mortgage payment
We intend to set out a tennancy agreement, get gas safety certs and get land lords insurance. We are also extremely confident of NOT failing the mortgage payments.
Do we really need to get consent to let from the lender?
How could the lender find out?
What would be the reprocusions for landlord and tennent?
Advice please, many thanks.
My wife and I have had a residential mortgage for 4 years with a perfect payment history. We are moving to Hong Kong for approx 2-3 years. Some very good friends of ours are going to rent our house. The agreed rent is considerably lower than the mortgage payments which is fine by us as we have somewhere to store our things and also have someone we can trust 100% in the house. The mortgage lender is Northern Rock. They say they, to get a consent to let,
- must have 30% equity
(we have no where near)
-the incoming rent must be 120% of the mortgage payment
We intend to set out a tennancy agreement, get gas safety certs and get land lords insurance. We are also extremely confident of NOT failing the mortgage payments.
Do we really need to get consent to let from the lender?
How could the lender find out?
What would be the reprocusions for landlord and tennent?
Advice please, many thanks.
0
Comments
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Yes, you absolutely do need consent to let from your lender. Be aware that the lender will probably put you on a buy-to-let mortgage, which will have a higher interest rate. At the end of the day, they're perfectly entitled to do so, as you're effectively making money on what they've lent you, so they want a cut. Also be aware that if you don't get permission, you could get in trouble.0
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Hi
My wife and I have had a residential mortgage for 4 years with a perfect payment history. We are moving to Hong Kong for approx 2-3 years. Some very good friends of ours are going to rent our house. The agreed rent is considerably lower than the mortgage payments which is fine by us as we have somewhere to store our things and also have someone we can trust 100% in the house. The mortgage lender is Northern Rock. They say they, to get a consent to let,
- must have 30% equity
(we have no where near)
-the incoming rent must be 120% of the mortgage payment
We intend to set out a tennancy agreement, get gas safety certs and get land lords insurance. We are also extremely confident of NOT failing the mortgage payments.
Do we really need to get consent to let from the lender?
How could the lender find out?
What would be the reprocusions for landlord and tennent?
Advice please, many thanks.
We're with Northern Rock and looked into renting, fortunately for us we can meet those two criteria. It was going to cost approx £200 odd and a form or two.. So the good news is you didn't have to transfer to a buy to let mortgage....
However if you are certain you can't meet that criteria then no you can't rent it's as simple as that...If you do a search on here you will find plenty of stories of people who have had done what you are suggesting only for it go horribly wrong....Your insurance will also probably be invalid...0 -
thanks for that.
Regarding making money, as i said. the rent comes no where near the mortgage payment,we stand to be out of pocket, its more of a house sitting arrangement,as we have pets that need looking after, very convenient for both parties. What kind of trouble are we talking, and HOW would the lender find out?0 -
thanks for that.
Regarding making money, as i said. the rent comes no where near the mortgage payment,we stand to be out of pocket, its more of a house sitting arrangement,as we have pets that need looking after, very convenient for both parties. What kind of trouble are we talking, and HOW would the lender find out?
Check the sticky at the top of the fourm and do a search for permission to let...there will be a number of stories there
It will still be counted as renting and your insurance probably won't be valid anymore meaning if there is a fire then you won't have any insurance to rebuild the house for example.
Your landlord insurance will be dependent on having permission to rent from your lender so you won't be able to get that either.0 -
far be it from me to suggest something not strickly but as they are good friends why not just come to an agreement by which they are housesitting (i don't think you need permission for this). then your friends can kindly agree to gift you some money.....conveniently. you might need to inform the lender (check your mortgage details) but tell them they are house sitters not tenants.
however, i'd make sure you cover all the sensible precautions like getting a gas safety check, having smoke and carbon monoxide alarms etc and discuss with your friends the contents insurance (what happens if the house burns down and their stuff goes up with it?).Those who will not reason, are bigots, those who cannot, are fools, and those who dare not, are slaves. - Lord Byron0 -
good point on the insurance0
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If you are planning to let at a figure way under the market rent then HMRC may have a comment on the arrangement0
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now that sounds like the answer im looking for, providing my lender plays ball, thanks0
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If you are planning to let at a figure way under the market rent then HMRC may have a comment on the arrangement
please explain this0 -
There are of course also Income tax implications, I can't be certain but believe a letting agent is duty bound to notify Inland Revenue however in your case any payment from your friends/tenants should be declared.
As you would be Non resident , if you havent/dont apply for Non Resident Landlord status then tax should be deducted by the "tenant" and paid by them to IR.
Gets very mucky but as far as I know IR do not cross reference with the Lender whether permission to let was sought/granted.0
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