Refusal of consent to let by mortgage lender

by Readers Question

11:03 AM, 22nd July 2013
About 5 years ago

Refusal of consent to let by mortgage lender

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Refusal of consent to let by mortgage lender

I have a residential mortgage and want to go and live abroad for a couple of years, during which time I want to rent out my house. My mortgage provider says I cannot have their permission to do this.

I don’t really want a buy to let mortgage as it’s only for a short period that I am going away.

What excuse can I use to get their consent?

Thanks

Sajad Khan
Refusal of consent by mortgage lender



Comments

Mark Alexander

11:13 AM, 22nd July 2013
About 5 years ago

Hi Sajad

It is very unusual for a mortgage lender to decline consent to let. Did you apply and get a response in writing? If so what was the reason they gave for their decision?

If your mortgage lender didn't give a reason then I suggest you ask them for one.

If they did give you a reason and you disagree then you might want to start the complaints process. The downside of this is time. Your mortgage lender will usually get back to you with their response to your complaint within 14 days but if you still don't like the decision and want to take the matter to the financial ombudsman it can take several months to get a final decision.

Mortgage lenders don't like complaints going to the financial ombudsman though as it costs them money and also a lot of hassle. Therefore, unless they believe they have a very good reason for refusing consent to let, chances are that consent will be granted.

I hope that helps.

If anybody says just let your property and go, note that the consequences could be foreclosure. Also note that advice on forums is not professional advice and that you have no come-back.

18:30 PM, 22nd July 2013
About 5 years ago

You have made the fundamental mistake of identifying yourself to your lender when posing the consent to let question.
Officially don't let.
Perhaps have a family member or associate live there for 'FREE'; acting as a glorified 'housesitter.
Should you decide to let without permission you could face foreclosure.
Hundreds of thousands accidental LL are doing what you propose to do if you cannot obtain consent to let
Nothing stops you taking on lodgers;
At say £600 pcm inclusive each for a 2 bed property.
You very rarely are there but that is because you are everywhere in the country!.
You couldn't have a AST but lodgers agreements are fine.
You can have the bedrooms occupied and you use the sofa don't you!? when you are around!!
You won't be able to afford the additional costs even if the lender allowed you to; they usually want higher IR and additional capital to reduce LTV which is impractical for most resi homeowners, which is why they become A LL in breach of their mortgage conditions.
Perhaps you need to throw the lender off the scent by confirming absolutely that if they will not give easy consent to let you will have to stay in your existing job.
That should be the last note on your mortgage account notes,
That should stop the lender making any further enquiries.
But for future reference NEVER identify yourself when making geneic enquiries about ma product you have or intend to have with an institution.or give a false name; but don't give an address.

Brian Godfrey

9:29 AM, 23rd July 2013
About 5 years ago

Sadly, lenders are no longer quite as helpful as they once were with regards to permission or consent to let. The upshot of this is that you now have less to lose from their refusal. If consent is granted you'll often pay a loaded rate, a heavy fee and probably face a lengthy interview and annual reviews. Also, what if you find you have to stay away for longer than anticipated?

If you do find you have to switch to a buy to let mortgage, because you want to return to your house as a main residence in the near future, the sale of the mortgage will be regulated. Also, remember to make your tenant aware of your desire to return. Not only is this good manners, this also means that if you get a problem tenant who doesn't want to move on, you can cite ground 1 in a Section 8 eviction notice (that you intend to return to the property to live in it), which is a mandatory ground, and if you can prove it the courts should automatically rule in your favour.

As Mark said, you can challenge the decision, but this does take time. Also, I don't think it's quite so unusual in recent years for lenders to deny permission to let. The reason for this is the now black-and-white distinction between regulated residential sales and unregulated BTL or commercial sales - regulators such as the FCA want there to be as little crossover between the two as possible.

Graham Clark

13:00 PM, 24th July 2013
About 5 years ago

Hi Sajad,

I think the reason for their refusal is key in this case.

Also, what do you class as a short period? The alternative course of action will depend greatly upon whether this is 6 months, 1 year, 2 years, etc etc.

Mary Latham

16:01 PM, 25th July 2013
About 5 years ago

I know almost nothing about finance/lenders etc. What does occur to me is that your lender may not be comfortable with you letting and leaving the country. I know of a recent case in my area where a couple let their lovely home and went to their holiday home in Spain for 6 months. When they returned their home was wrecked because it had been used as a cannabis farm. The insurance company would not pay out for the major repairs because the property had been left tenanted with no one keeping an eye on it. If this couple had used a letting agent the story would have been different. I the farmers would probably not have chosen their home If they had the Agent would have found out at an early stage. The insurance would have had to pay out.

I wonder if your lender has similar concerns? If this is the problem the use of a letting agent may be all that is needed to overcome their objection. In any event I would strongly suggest that you do not leave your property without a caretaker or agent to keep an eye on it.

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Howard Reuben CeMap CeRER

15:42 PM, 26th July 2013
About 5 years ago

Hi Sajad

"What excuse can I use to get their consent?" - you can't simply look for the right 'excuse' - please always disclose the truth and if they say no, look to refinance to a lender who says yes. A breach of terms can have consequences.

There ARE lenders out there who will lend to ex-pats, and although the deal may not be as attractive as a residential mortgage rate, the 'cost' of "misleading" your lender could be ultimately quite punitive.

Adrian Jones

12:57 PM, 27th July 2013
About 5 years ago

Reply to the comment left by "Howard Reuben" at "26/07/2013 - 15:42":

Totally agree with Howard. Be upfront and save youself a lot of hassle later..

Gavin Morris

6:27 AM, 23rd August 2013
About 5 years ago

Hi guys, is consent to let only a short term fix? Would I eventually have to change to a BTL mortgage?

Brian Godfrey

9:15 AM, 23rd August 2013
About 5 years ago

Reply to the comment left by "Gavin Morris" at "23/08/2013 - 06:27":

HI Gavin. Generally, yes, consent to let tends to have a limited time-frame. In addition, your lender might put you on a higher interest rate to reflect the perceived increase in risk.

Consent to let might be a better option for individuals who know they're only relocating temporarily and/or who don't have a lot of equity in their property for a buy to let remortgage. If you think you're going to be away for a long time, refinancing might be the better option.

You can find out more about the 'let to buy' process here: What, exactly, is let to buy?

Bruno Karasek

16:31 PM, 3rd August 2015
About 3 years ago

What can one do if you have have a fixed term mortgage with cancellation fees but the lender does not give consent to let? You might be willing to change to a buy to let, but would still have to incur the early termination costs?

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