What is consent to let and when do you need it? If you find yourself in a position where you want (or need) to rent out your property on a short-term basis, you’re going to need consent to let if you want to stick with your existing residential mortgage.
In today’s post, we’re going to take a deep dive into all things consent to let so that you’ll be fully informed before you approach your lender.
Let’s get to it.
What is consent to let?
As we touched on in our intro, consent to let is a written agreement between homeowner and lender that gives the owner permission - consent - to rent out their property whilst keeping their existing residential mortgage in place.
So, I can’t just let my property on a residential mortgage?
No. Residential mortgages are, by their very nature, designed for homeowners who intend to live in the property they are purchasing. So, somewhere in amongst the small print of your residential mortgage you will find a stipulation that states you must live in the property.
As this is a condition you agreed to when you signed your mortgage agreement, breaking it by renting out your home to someone else would put you in breach of contract…and that could mean financial penalties if you get caught.
These penalties can range from increased interest rates all the way up to demanding immediate repayment of the entire mortgage, which would then lead to repossession if you are unable to pay the loan off in full.
When is it advisable to opt for consent to let?
Consent to let is very much a short-term solution. If you think you’ll need to rent out your home for longer periods of time, you’ll need to switch from residential to buy-to-let mortgage.
Here are a few common examples of when consent to let makes sense:
- Brief stints overseas, whether for work or pleasure
- Temporary work placement away from home, but still in the UK
- Moving in with a relative to help with their care
- Moving in with a partner and renting your home while you sell it
- Armed forces on a tour of duty abroad
How do I go about getting consent to let?
All of the major High Street lenders have options available to clients looking for consent to let. While the overall process may vary from provider to provider, all are relatively straightforward and painless to carry out. The quickest way to get consent is to give your lender a call, although some will allow you to apply online.
Below is a list of lender pages that cover renting out your home:
- Barclays Consent to Let
- Halifax Consent to Let
- HSBC Consent to Let
- Nationwide Consent to Let
- Natwest Consent to Let
- Royal Bank of Scotland Consent to Let
- Santander Consent to Let
- TSB Consent to Let
Can a consent to let application be turned down?
In the vast majority of cases, obtaining consent to let is pretty simple if you have a solid reason for applying. However, there are a few instances where a lender may think twice:
- If you have held your mortgage for less than six months
- If you have missed mortgage payments
- If your finances are not in good shape
- If you do not have enough equity in the home
- If the prospective rental income doesn’t meet the mortgage repayments
- If you are part of a government scheme that prohibits property letting
Are there any associated fees
As one would expect, there are usually fees attached to consent to let applications. How these are applied, and their overall amount, will vary from lender to lender, so you’ll need to check with yours to get a better handle on what you’ll have to pay and how you’ll have to pay it.
Some will be flat fees, others will want to increase your interest rate. Some may not charge anything. It really does vary.
Are consent to let fees tax deductible?
Yes, consent to let fees are considered tax deductible as they are deemed to be a pre-letting expenditure.
How long does consent to let last?
As we’ve already mentioned above, consent to let is very much a short-term fix, so don’t expect to go beyond 24 months. In most cases, six to 12 months is the norm.
What happens when the consent to let comes to an end?
When the consent period comes to an end, your lender will revert you back to the conditions that were in place prior to consent being granted. If you find yourself in a situation where you would like to continue renting out your home, give the lender a call. They may be willing to extend the period of consent or suggest switching to buy-to-let.
If the latter crops up, it’s important to bear in mind that you’ll be free to shop around elsewhere for the best buy-to-let deal. Just because your lender has offered to switch you to a buy-to-let mortgage, that doesn’t mean you have to accept it.
Can I let my property to relatives?
Again, this will be lender dependent - some will, some won’t. Those who will not grant consent to let to relatives will generally ask you to apply for a family buy-to-let mortgage instead.
Can I get consent to let on a Help to Buy mortgage?
Most of the government housing schemes have conditions that prohibit you from renting out your Help to Buy property. Subletting is potentially available to serving members of the armed forces who wish to rent out their property while they are away on active service, but for everyone else this isn’t allowed.
Advantages and disadvantages of consent to let
- Can help with mortgage repayments if you are forced to be away from home
- Can help finance travels
- Allows you time to sell your property if you find, and buy, your dream home beforehand
- Allows you to give buy-to-let a shot in the short-term without fully committing
- Costs can be prohibitively expensive
- You will effectively become a landlord and have all the associated costs and responsibilities that go with it
- Void periods will mean you will still have to stump up for your mortgage repayments
Petty’s is one of East London’s oldest estate agents, and we have a wealth of experienced staff who love helping people move home.
If you’re buying or selling in or around London, we’d love the chance to help make your next move as stress-free as possible. Give our team a call today to find out what makes Petty Son and Prestwich different from the rest.