Obtaining permission from mortgage provider to rent rooms?

by Readers Question

9:54 AM, 18th June 2018
About 3 months ago

Obtaining permission from mortgage provider to rent rooms?

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Obtaining permission from mortgage provider to rent rooms?

I am seeking advice on how best to approach my mortgage provider. Under their current rules they permit two rooms being let.

However, it is currently a three bedroom property and intend on making the loft into a en-suite bedroom another room on a lower ground floor extension.

I will remain residing in the property.

Initial phone conversion with provider said you can have up to 4 rooms let providing there is only one tenancy agreement. I Don’t intend on splitting the property, but know people who have.

Many thanks

James



Comments

Neil Patterson

9:58 AM, 18th June 2018
About 3 months ago

Hi James,

I think your lenders biggest concerns will be future intent and what the property may be used as in the future.

At the moment as you are living in the property so can I assume that this is a residential mortgage and the people renting the rooms are lodgers?

The lender could be concerned it looks like you may be trying to create an HMO and you may move out and require planning permission.

Michael Barnes

12:11 PM, 18th June 2018
About 3 months ago

I believe (but have no references, just vague memory) that taking in 3 lodgers makes you subject to HMO regulations; 2 is OK.

Jan Martin

13:42 PM, 18th June 2018
About 3 months ago

Yes Michael unless changed since I took couple lodgers I understand that 2 lodgers ok but anymore brings about regs .

Jay James

18:07 PM, 18th June 2018
About 3 months ago

Being a resident landlord does not affect whether or not you must comply with HMO rules. With the required number of unrelated residents/floors, you must comply with HMO rules even though you may not have to register as a HMO.

According to https://www.gov.uk/private-renting/houses-in-multiple-occupation, a HMO is where 3 or more residents are not related and share facilities listed. They use the word tenant, but it still applies to residents that are lodgers.

Jay James

18:15 PM, 18th June 2018
About 3 months ago

Correction: a HMO is where there are 3 or more residents forming more than one household..

Sami Houmrani

21:33 PM, 18th June 2018
About 3 months ago

If you propose to let a mortgaged property, or a room within it, you will require permission from the mortgage lender. It will be a term of that agreement that you get the lender’s permission before you let the property, even if you are just letting one room in it. This is because the mortgage lender will be concerned that you are not doing anything that may affect the value of their investment and their ability to recover the loan they paid you to buy the property. You will need to check the terms of your mortgage. For many Buy to Let mortgages permission to rent the property may be automatic, but even in Buy to Let mortgages there may be conditions on the type of let permissible e.g assured shorthold tenancies only’ or a restriction on housing benefit tenants. If you are unsure of the requirements, speak to your legal adviser assisting with the purchase. You will probably need special permission from the lender if you want to rent the property out as rooms or bedsits which would create a House in Multiple Occupation.

If you purchase the property as an owner-occupier on a standard mortgage for home owners, you will need to obtain permission to rent the property to tenants. The lender may increase the cost of the mortgage if they give permission to rent the property out. Usually a lender will not object to one room being rented out to a lodger.


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