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There are rules that prevent you from renting out your home without obtaining a consent to let from your mortgage provider.
Below, you’ll discover how a consent to let works, and when you’ll be able to get one.
It’s an agreement between you and your residential mortgage lender that grants you permission to rent out your home, without having to remortgage onto buy to let finance.
Not all lenders offer this facility and those that do will normally only grant permission for a certain amount of time, commonly 6-12 months.
Consent to let agreements are usually only valid for a limited time. This means they’re not a long-term solution for prospective landlords, but can be a handy stop-gap while you move house and rearrange your finances.
The most common reason for wanting a consent to let is if you need to move further afield for work or if you wanted to move in with a partner. This would help you cover costs on your previous home while you rent, buy or move in elsewhere before you can sell the property, thereby avoiding any early repayment charges on your mortgage.
There are a fair amount of restrictions that some lenders may enforce, so it’s good to be ready for these should they arise. These could be restrictions on how long your consent to let is valid for before it needs to be reviewed, and also restrictions on certain types of mortgage, for example Help to Buy and shared ownership mortgages. There’s also a range of potential criteria that may have to be met before you qualify for a consent to let mortgage. For example, you may be asked to prove that you have a certain level of equity in your home, e.g. 20%, or may you need to have a certain minimum income.
While residential mortgages are generally cheaper than buy to let ones, you might think consent to let is an ideal way to save money on an investment property. Unfortunately, this isn’t the case.
Lenders will either charge an extra percentage rate on top of your normal rate or there will be a fee to gain consent. Some lenders may even charge both.
The cost of consent to let varies from lender to lender, so it’s a good idea to call your lender directly, ask if they allow consent to let and what they charge.
On top of these potential charges, you’ll have to arrange and pay for repairs and maintenance during the tenancy if anything were to go wrong, so it’s a good idea to set aside some savings as a contingency fund.
Consent to let allows you to move house quickly while reducing the stress of paying for two mortgages, or a mortgage and rent, simultaneously.
Because the lender is likely to make sure the rental income comfortably covers the mortgage payments, it should at least cover costs.
Consent to let is also a relatively straightforward way to start renting out your home without fully committing to a buy-to-let mortgage and the hefty fees that are often associated with them.
However, be aware that consent to let isn’t risk-free. If you can’t find the tenants for your home, you’ll be in the stressful situation of meeting the mortgage payments as well as rent or mortgage on the home you move to.
As well as mortgage fees and/or a higher interest rate, you’ll still have all the other costs associated with becoming a landlord.
Another thing to think about is that you might need to engage a letting agent to market and manage your property. This is because you’ll need to make sure the décor and furnishings are safe and attractive for tenants, as well as ensuring certain landlord obligations, like fitting smoke alarms and getting a gas safety certificate.
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