What is Consent to Let?
Consent to let is the approval from a mortgage lender allowing a property owner to rent out their property. This is necessary when the mortgage is not a buy to let mortgage. Besides the mortgage lender, landlords may also need permission from:
- Any housing association or organisation regulating the property, such as those involved in shared ownership.
- Any adult residing in the property with the landlord as a spouse or partner who has occupancy rights.
- The landlord’s insurance provider, to ensure coverage remains valid when the property is let out.
Why Do I Need Consent to Rent Out My Property?
Residential mortgages typically require the owner to live in the property. Renting out the property without lender permission violates the mortgage terms, potentially leading to penalties such as higher interest rates or additional fees. If your mortgage isn’t a buy to let, you need to either obtain consent to let or switch to a buy to let mortgage.
When might Consent to Let be Necessary?
Consent to Let may be needed if a homeowner purchases a new property but cannot sell their existing one and decides to rent it out temporarily. As a landlord, you have landlord responsibilites and must meet obligations such as inspections, repairs, and general maintenance. Additionally, your lender may require a buy to let buildings insurance policy. Below are more details on lender requirements.
When Should I Get Consent to Let?
As soon as you decide to rent out your property, contact your mortgage lender to request permission. Situations where consent to let might be beneficial include:
- Fixed term mortgage: Renting out your property can help avoid early repayment charges if you wish to move before your mortgage term ends.
- Temporary relocation: If you plan to move abroad temporarily but intend to return, renting out your home can provide income to cover your living costs elsewhere.
How to Obtain Consent to Let
To obtain permission to let your property, you need to contact your mortgage lender directly. Each lender has a specific process for granting consent to let, and it’s essential to understand and follow their requirements carefully. Here are the general steps to guide you through the process:
Steps to Obtain Consent to Let Mortgages:
- Review Your Mortgage Terms:
Before reaching out to your lender, review the terms and conditions of your mortgage agreement. This will help you understand any specific clauses related to letting out your property and prepare any necessary documentation or information.
- Contact Your Mortgage Lender:
Initiate contact with your mortgage lender’s customer service or mortgage department. This can usually be done via phone, email, or through an online account if available.
- Explain Your Situation:
Clearly explain your reasons for wanting to rent out the property. Whether it’s due to a temporary relocation, a change in financial circumstances, or any other reason, providing a clear and honest explanation will help your case.
- Provide Required Documentation:
Lenders typically require specific documentation to process your request. This may include proof of income, details of the prospective tenancy agreement, and evidence of your ability to cover mortgage payments if the property is vacant.
- Understand the Costs:
Inquire about any fees associated with obtaining consent to let. Some lenders may charge a onetime fee, while others might increase your interest rate. Understanding these costs upfront will help you budget accordingly.
- Wait for Approval:
Once you have submitted your request and all necessary documentation, you will need to wait for the lender’s decision. The approval process time can vary depending on the lender and the complexity of your situation.
- Receive and Review Consent:
If your request is approved, you will receive a formal consent letter or agreement from your lender. Review this document carefully to understand the terms and conditions, including any limitations or obligations imposed by the lender.
- Maintain Compliance:
Ensure you comply with all terms and conditions set by the lender. This includes maintaining regular mortgage payments and adhering to any specific requirements outlined in the consent agreement.
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Examples of Lenders Offering Consent to Let
Several major mortgage lenders in the UK offer consent to let. Here’s a brief overview of some well known lenders and their processes:
Halifax requires you to contact their mortgage department to discuss your circumstances. They may ask for details about your tenancy agreement and financial situation before granting consent.
- HSBC:
HSBC typically requests that you complete a form or submit a written request. They will review your application and may impose certain conditions or fees.
Barclays offers consent to let for specific periods, usually aligning with your mortgage term. You’ll need to provide details about the rental arrangement and ensure you meet their criteria.
Nationwide may require proof of rental income and evidence that you can cover mortgage payments even if the property is vacant.
NatWest allows you to apply for consent to let through their customer service. They may charge a fee and require documentation supporting your request.
Santander’s consent to let process involves completing an application form and providing details about your rental plans. They will assess your request and may adjust your mortgage terms.
- Royal Bank of Scotland (RBS):
RBS requires you to contact them directly to discuss your request. They will outline the necessary steps and documentation needed for approval.
- TSB:
TSB has a specific application process for consent to let, which includes providing details about your tenancy and financial situation. They will review your request and may charge a fee.
Key Considerations
- Early Communication:
Contact your lender as soon as you know you want to let out your property. Early communication can help you avoid potential complications or delays.
- Financial Implications: explain further the implications
Be aware of any financial implications, including fees and potential changes to your mortgage interest rate. Budget accordingly to ensure you can meet these additional costs.
- Insurance and Legal Requirements:
Ensure your homeowner insurance is converted into landlord insurance policies, covering rental activities and complies with all legal requirements for letting out your property. This includes gas safety checks, electrical inspections, and other mandatory regulations.
By following these steps and understanding the processes of different lenders, you can navigate the consent to let procedure more effectively, ensuring compliance with your mortgage terms and protecting your investment.
Consent to Let: Pros and Cons:
Pros:
- Flexibility: Allows homeowners to rent out their property without needing to immediately switch to a buy to let mortgage, which can involve higher interest rates and fees.
- Avoid Early Repayment Charges: Homeowners with a fixed term residential mortgage can avoid early repayment charges by obtaining consent to let rather than refinancing.
- Short Term Solution: Ideal for those needing a temporary arrangement, such as expatriates who plan to return to their home country.
Cons:
- Fees and Higher Interest Rates: Some lenders may charge a fee for granting consent to let or increase the interest rate on the mortgage.
- Limited Time Frame: Consent to let is usually granted for a limited period, after which homeowners must either renew the consent or switch to a buy to let mortgage.
- Stricter Conditions: Lenders may impose additional conditions or restrictions that do not apply to buy to let mortgages.
Mortgages Lender conditions to obtain a Consent to Let
Lenders often require certain conditions to be met before a they allow a homeowner to take out a Consent to Let mortgage. You should call your lender to get details of their specific requirements, but they often include the following:
- Time with the lender
Often there is a limit on the amount of time the Consent to Let mortgage is valid for before the lender reviews it, normally this is 12 months but depends on the lender.
In order to gain permission for a Consent to Let, lenders state you have already got a mortgage deal with the lender for a certain amount of time, usually more than six months.
- Equity
Lenders may require a certain amount of equity to be in your home as the income from the rent should cover the mortgage costs.
- Income
There may be a minimum income that you have to have in order to be eligible for a Consent to Let mortgage however, this is dependent on the lender’s specifications.
- Help to Buy and Shared Ownership
If you have these types of mortgages lenders often recommend that you convert to a normal residential mortgage before changing to a Consent to Let, this can be done by either repaying any shared equity or loans on the property.
- Tenancy Agreement requirements
Your lender is likely to require you to enter into a formal tenancy agreement (as opposed to an informal verbal agreement) with your tenant:
Tenancies must be Assured Shorthold Tenancy agreements (AST) that comply with the Housing Act 1988
If you own a leasehold flat, depending on what your lease says, you may need to obtain written permission to rent your flat from your freeholder. If your lease does not permit you to sublet your flat, you will need to agree a deed of variation to your lease with the freeholder. You can read more on this in our blog, Deed of Variation of lease for your flat.
The tenancy agreement must include terms that the tenant maintains the condition of the property and only use it as a private dwelling
You, the landlord must inform the tenant that:
- the property has been mortgaged
- the mortgagee can take possession of and sell the property
- the mortgagee has power of sale
- they will be given 2 months’ notice to vacate the property in the event of a possession
You, the Landlord must comply with all relevant legislation and regulation required to let a property e.g. Tenancy Deposit Scheme registration with prescribed clauses, valid EPC and gas safety certificate and service of how to rent guide. For more information on your requirements, read our blog on Section 21 No Fault Notices & Possession
If a tenant breaches the terms of the tenancy agreement, there must be arrangements in place to terminate the tenancy at the end of the letting or earlier
What is the Cost of Consent to Let?
Fees for consent to let vary by lender. Some charge a onetime fee, while others may increase the interest rate. Costs depend on the type of mortgage, when it was taken out, and any early repayment charges.
What is the Duration of Consent to Let?
Lenders typically grant consent to let for a fixed term, often aligning with the mortgage term or on a 6–12month basis. Upon expiration, the lender may extend the consent or suggest switching to a buy to let mortgage.
Can Consent to Let Be Refused?
While most lenders are accommodating, some restrictions might apply, such as:
- Minimum income and sufficient equity requirements
- A minimum mortgage tenure with the lender
- Consistent mortgage payment history
- Restrictions on Help to Buy or shared ownership properties
How we can help
We, at Starck Uberoi, always encourage our clients to seek advice before making changes on their mortgages. Our mortgage advisors will advise you what to do when applying for a Consent to Let and will be able to advise you how to proceed with a Buy to Let mortgage should your lender not give consent to let.
The role of our Partner Mortgage Advisor:
We, the mortgage Advisors will:
- Assess your current situation
- Discuss and consider your future aspirations and contingencies
- Advise you on the best product available on the market
- Process your full mortgage application all the way until the offer is received
What are the Consequences of Not Getting Consent?
Renting out your property without lender approval breaches your mortgage contract. Consequences may include:
- Higher interest rates
- Additional regular payments
- Backdated payments on any unauthorised interest or fees
For further information, refer to landlord entry rules and property management guidelines.
What Valid Reasons Are There for Consent to Let?
There are several valid reasons why a homeowner might seek consent to let from their mortgage lender:
- Temporary Relocation: Homeowners who need to move temporarily, whether for work, study, or personal reasons, may want to rent out their property to cover mortgage payments and other expenses while they are away.
- Change in Financial Circumstances: Unexpected financial difficulties, such as a loss of income or significant expenses, might lead a homeowner to rent out their property to generate additional income.
- Moving but Unable to Sell: In a slow housing market, a homeowner may choose to rent out their property if they are unable to sell it at a desirable price. This can provide interim income until market conditions improve.
- Inheritance: If someone inherits a property but cannot or does not wish to live in it, they might seek to rent it out rather than sell it immediately.
- Investment Strategy: Homeowners who initially bought their property with a residential mortgage but later decide to turn it into an investment property might seek consent to let as an interim step before switching to a buy to let mortgage.
Can I Rent My Property to Family?
Possibly, however It depends on your mortgage lender whether you can rent your property to family members. Here are some considerations to keep in mind:
- Fair Market Rent: It is advisable to charge fair market rent to avoid any issues with tax authorities or accusations of preferential treatment.
- Formal Agreement: Ensure there is a formal tenancy agreement in place, just as you would with any other tenant, to outline the terms and conditions clearly.
- Consent to Let: You still need to obtain consent to let from your lender, even if the tenant is a family member.
What Are Buy to Let Properties?
Buy to let properties are residential properties purchased specifically to be rented out to tenants. This investment strategy is popular among those looking to generate a steady income stream and benefit from potential property value appreciation over time. Here are some key aspects of buy to let properties:
Key Aspects of Buy to Let Properties
- Investment Purpose: Unlike typical home purchases made for personal use, buy to let properties are bought with the intention of renting them out to tenants.
- Rental Income: Owners earn rental income from tenants, which can help cover mortgage payments, property maintenance, and other expenses, often resulting in a profitable return on investment.
- Property Appreciation: Over time, buy to let properties can increase in value, providing the owner with potential capital gains when they decide to sell.
- Financing: Mortgages for buy to let properties often have different terms compared to residential mortgages, typically requiring a larger down payment and potentially higher interest rates.
- Management Responsibilities: Owners are responsible for maintaining the property, complying with rental regulations, and managing tenant relationships, which can be done personally or through a property management company.
Investing in buy to let properties can be a lucrative venture, but it also requires careful planning and management to ensure long term success and profitability.
Is It Illegal to Rent a House Without a Buy to Let Mortgage?
Renting out a property without the appropriate consent or a buy to let mortgage is not illegal per se, but it is a breach of your mortgage agreement. This can lead to serious consequences, including:
- Penalties: The lender may impose financial penalties or increase your interest rate.
- Mortgage Recall: The lender could demand immediate repayment of the entire mortgage.
- Reputational Damage: Breaching the terms of your mortgage can damage your credit rating and future borrowing prospects.
When Might Consent to Let Be Refused?
Lenders may refuse consent to let under certain circumstances:
- Insufficient Equity: If there is not enough equity in the property, the lender may consider the risk too high.
- Poor Payment History: If you have a history of missed or late mortgage payments, the lender may be hesitant to grant consent.
- Short Mortgage Duration: Some lenders require you to have held the mortgage for a minimum period before granting consent to let.
- Help to Buy and Shared Ownership Restrictions: Properties under these schemes often have strict rules about renting out.
- Inadequate Rental Income: If the projected rental income does not sufficiently cover the mortgage payments, the lender may refuse consent.
How Easy Is It to Get Consent to Let?
The ease of obtaining consent to let varies by lender and individual circumstances. Generally, if you have a good payment history, sufficient equity, and a valid reason for renting out your property, the process can be straightforward. However, each lender has specific criteria, so it’s important to communicate openly and provide all necessary documentation.
Is Consent to Let Better Than Buy-to-Let?
Whether consent to let is better than a buy to let mortgage depends on your situation:
Consent to Let:
- Short Term Solution: Ideal for temporary renting.
- Lower Initial Costs: Avoids the immediate higher costs and interest rates of a buy to let mortgage.
- Flexibility: Easier to switch back to residential status if circumstances change.
Buy to Let Mortgage:
- Long Term Renting: Better suited for those planning to rent out their property indefinitely.
- Tailored Product: Designed specifically for landlords, with features and benefits suited to property letting.
- Financial Planning: May offer more predictable terms and conditions for long term financial planning.
Do I Need Consent to Let for Airbnb?
Yes, you typically need consent to let from your mortgage lender to list your property on Airbnb or other short term rental platforms. Short-term letting can be considered a form of renting out your property and may have additional requirements or restrictions compared to traditional long-term leases.
Frequently Asked Questions for Landlords Letting a Property
Do I need a special insurance policy as a landlord?
Yes, standard home insurance policies often do not cover rental activities. You need landlord insurance, which covers property damage, loss of rent, and liability.
What legal obligations do I have as a landlord?
You must ensure the property meets health and safety standards, conduct regular gas and electrical safety checks, provide an Energy Performance Certificate (EPC), and protect tenant deposits in a government approved scheme.
Can I increase the rent during a tenancy?
You can only increase rent according to the terms set out in the tenancy agreement or through mutual agreement with the tenant. Typically, rent increases are subject to market conditions and regulatory guidelines.
What should I do if a tenant does not pay rent?
Contact the tenant immediately to discuss the situation. If the issue persists, you may need to follow formal eviction procedures, adhering to legal requirements and notice periods.
How do I handle maintenance and repairs?
As a landlord, you are responsible for maintaining the property in a habitable condition. Promptly address any repair requests from tenants to avoid legal issues and maintain a good landlord tenant relationship.
Can I enter the property without tenant permission?
You must give tenants at least 24 hours’ notice before entering the property, except in emergencies. The terms of entry should be clearly outlined in the tenancy agreement.
What is a tenancy agreement?
A tenancy agreement is a contract between you and your tenant outlining the terms of the rental arrangement, including rent, duration, responsibilities, and conditions for termination.
How do I evict a tenant?
Eviction must follow legal procedures, which vary depending on the type of tenancy. Typically, this involves serving notice, seeking a court order, and following due process to ensure compliance with landlord tenant laws.
What is the tax treatment of rental income?
Rental income is subject to income tax. You can deduct allowable expenses from your rental income to calculate your taxable profit. It is advisable to consult a tax professional to ensure compliance with tax regulations.
While not mandatory, a property management company can handle day to day management, tenant issues, and maintenance, especially if you do not have the time or expertise to manage the property yourself.
How Starck Uberoi can help
Our experienced mortgage and Conveyancing team will deal with your matter efficiently to ensure you get the best deal. Our experienced conveyancing solicitors work closely with the mortgage team to provide the most efficient service. For more information, please visit our Conveyancing pages, or to book an appointment please call 020 8840 6640.
We have solicitors in Brentford on the High Street in a grand three-story building, just a ten minute walk from Brentford Railway Station. Our solicitors in Richmond on Thames overlook the picturesque Richmond Green just a five 5 minute walk from Richmond train station. Our Belgravia solicitors are located in a prestige location in Grosvenor Gardens and our solicitors in Ealing Broadway are located close to the University of West London. Finally our Canterbury solicitors are located in the within the UNESCO World Heritage Site of Canterbury Cathedral.
For an appointment at any of our offices, email us at solicitor@starckuberoi.co.uk or call 0208 840 6640.
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