For landlords renting out their own home, getting permission from your lender is what is referred to as obtaining a Consent to let.
Typically, if you have a mortgage on the property and it is not a buy-to-let mortgage, your lender may insist on providing you with a consent to let before you can rent out your property.
Here are some other organisations you may need to get consent to let from:
- Mortgage lender (unless the property is on a Buy-to-Let mortgage)
- In respect of leasehold properties, the head Landlord
- Any housing association or other body which has regulations applying to the property, e.g shared ownership
- Any adult who has been living in the property with the Landlord as husband, wife or partner who may have occupancy rights
- The Landlord’s insurance company who must confirm that cover will be maintained if the property is let
Why do I need to get consent to let my own property?
Your mortgage lender will have issued you with a contract when they lent you the finance to purchase or remortgage your property, i.e. your mortgage documents. The contract of lending usually implies that the bank will lend you the money to purchase the property on the condition that you have been able to prove your income and confirm that either you or your family will be living in the property as a home owner.
If you let a property without the proper consent from your bank, you may be in breach of your mortgage contract which could result in financial penalties such as:
- Additional interest charged on top of another rate you're paying so that there is an added rate; and
- You may be forced to pay a regular additional payment or
- Backdate any extra interest or additional payments to when you originally let your property.
How do I get a consent to let from my lender?
The first step in obtaining a consent to let from your mortgage lender is to call them and discuss your options. We would suggest that at this stage, you are simply ‘exploring your options’ with the bank rather than suggesting you are trying to let the property out immediately, why?
Most banks will be reasonable and may be able to give you consent to let for either a certain period, i.e. 12 months or for a small fee. Other banks may insist on you changing your mortgage from a homeowner’s mortgage to a Buy-to-Let mortgage. This process can be costly depending on the new interest rates and the administration fees applied. The bank may even insist on running checks again.
Do lenders charge consent to let fees?
Consent to let fees vary from lender to lender. At time of writing, here are the most common lenders consent to lease fees:
- Natwest and Royal Bank of Scotland - £100 per consent to let
- Halifax - Zero charge and you remain on the same interest rates
- HSBC - Zero charge however, you will not be able to apply for further funds or change the mortgage product whilst you are letting the property.
- Barclays - Zero charge however, you will not be able to apply for further funds or change the mortgage product whilst you are letting the property.
- TSB - If you apply for a consent to lease within six months of your residential mortgage starting, you will need to take out a new buy-to-let mortgage. To do this you must end the mortgage you've taken out and pay any early repayment charge that applies.
- Nationwide - Zero charge however they will add an additional 1% to your current interest rate after you've been letting out your property for 6 months.
- Tesco Bank - £30 per consent to let
When will a consent to let not be given?
Most lenders are flexible when it comes to applying for a consent to let, however some restrictions may apply such as:
- You have held your mortgage for less than six months
- You have not kept up to date with your mortgage payments
- Properties with multiple tenancies. This means where each tenant signs a separate agreement and/or has separate facilities e.g. a House of multiple occupation (HMO)
- The maximum number of tenants on one tenancy is five and all tenants must be party to one agreement.
- Tenancies must be in writing for a fixed term of up to 12 months in England and Wales, nine months in Northern Ireland and six months in Scotland.
If you are unsure on how to obtain consent to let before renting out a property, we would advise that you seek assistance from a qualified Financial Advisor who may be able to contact your bank on your behalf.