Shelter’s Income and expenditure figures highlighted13:57 PM, 4th February 2019
About 2 weeks ago 35
Letting a property on a 3 of even 5 year contract to the local authority may seem like an attractive idea for some landlords. As well as helping to ease the chronic public sector housing shortage, the landlord benefits from a guaranteed rent paid into their account every month without fail for the period of the contract and usually with no management charges. What’s there not to like?
Well, the landlord is not able to vet the type of tenant placed in his or her property, but on the other hand this consideration is balanced by the contract usually stipulating that the property will be handed back upon termination in the same condition as it was received.
There is one factor however many landlords letting to local authorities often overlook. Most buy to let lenders’ criteria specifically exclude this type of tenancy thus letting directly to local government or to tenants in receipt of benefits will often place the landlord in breach of their mortgage conditions.
Fortunately help is at hand should you find yourself in this position. I have access to a specialist buy to let lender that will allow local authority and limited company contracts extending to as much as five years. The maximum loan to value is 80% and rates are very competitive often with a free valuation thrown in. In many cases it may be possible to refinance to reduce monthly payments and perhaps even raise capital for further investment.
If you would like to learn more about this subject or discuss your particular mortgage or protection requirements please contact me.
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