Trapped by consent to let

by Readers Question

15:11 PM, 15th February 2016
About 3 years ago

Trapped by consent to let

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Trapped by consent to let

I bought my first house 1 1/2 years ago, at £159k. Unfortunately on new years eve I was made redundant, and there are no jobs available in the local area I have been offered a new job up in Scotland.boxed in

The property value (Btw, its a help to buy property) has unfortunately decreased to around £150k and the likelihood of selling this at present is dim. I have requested consent to let paperwork from my lender however they will not consider moving my deal meaning in two months I revert back to the standard rate.

My redundancy package gives me around a 5% deposit on a property in Scotland of a similar size, but I now discover 95% mortgages are unavailable on a second home? Is there any other routes or scenarios I could consider, my lender is unwilling to discuss as their mortgage payments are not in immediate danger of being affected?

Thanks

Stuart



Comments

Neil Patterson

15:17 PM, 15th February 2016
About 3 years ago

Hi Stuart,

I feel for your predicament and I am not sure what you can do other than rent for a while in Scotland until something swings in your favour.

This is an unfortunate example of how the Government want to encourage home ownership and workforce mobility whilst making it harder for the PRS.

And then if you could buy another house Stuart the government would hit you with an additional 3% stamp.

Trendo

23:56 PM, 15th February 2016
About 3 years ago

What is the reason for withholding consent to let ?

Neil Patterson

8:45 AM, 16th February 2016
About 3 years ago

Reply to the comment left by "Trendo " at "15/02/2016 - 23:56":

I think it will be because it is a Help to Buy

Mike W

12:20 PM, 16th February 2016
About 3 years ago

Like Neil I suspect the issue is that it is help to buy that is the problem. In these cases it is best to 'lay out your case clearly - in writing.' And try and get them to provide solutions. Frankly I have always been sceptical about these 'help to buy deals'. Whenever I have looked at them (on behalf of my children) I have concluded that the property was grossly overpriced by the seller.
But lets look for solutions. Consent to let should not be unreasonably withheld. The scheme may be designed to be that way but is the scheme sensible for your circumstances. Get others involved. EG MP. Tackle those in Government who set such rules and (as usual) have not thought through the consequences. Were your told upfront you would never be able to rent it?

Good luck.

Stuart Nail

12:28 PM, 16th February 2016
About 3 years ago

Apologies all, I wrote the initial post in rather a flurry.

The Lender is sending me out the pack to which I will have to apply, however my two year fixed deal is due up in June.

They advised that if I apply for consent to let they would not consider signing me up for another deal (2 or 5 year etc etc) and I would drop onto the base rate, after six months this would then be supplemented by their 1% let charge, meaning the monthly mortgage payments would be higher than the rental income. I argued that this would mean I have no chance of achieving the 125% of monthly mortgage payment they require to consent to let.

A tough situation, I have now had clarification a 95% mortgage for a second home in Scotland (Despite it becoming my main property) is not achievable so I will need to look at max LTV of 90%.

Things are never simple!

Luke P

14:47 PM, 16th February 2016
About 3 years ago

Personally, I would rent it out anyway (consent to let or not). This maybe against the lender's rules, but you have little choice. They're not likely to call in the loan as they're unlikely to recoup their outlay if prices have dropped and they're in it to the tune of 95%. I think as long as you're paying every month, you'd be fine and they won't bother you.

Make sure you rent it out properly, getting the necessary insurance, dealing with any deposits and informing HMRC of the income.

I wouldn't look at buying another house just yet, rather stick to renting until you can find a long-term solution for your first property.

Stuart Nail

16:29 PM, 16th February 2016
About 3 years ago

Reply to the comment left by "Luke P" at "16/02/2016 - 14:47":

Thanks Luke, that was my original intention, taking out a new dea and under the radar but I was warned off it.

I'm moving to rural Scotland luckily so I've upended my house search end am looking at something a little more frugal (90k range) which will more than suffice for me and make my deposit go much further.

Dr Rosalind Beck

17:15 PM, 16th February 2016
About 3 years ago

Reply to the comment left by "Stuart Nail" at "16/02/2016 - 16:29":

I'm not sure if your insurance would be valid if it was a residential insurance and if you have a BTL insurance they may want to notify the lender...

Luke P

20:59 PM, 16th February 2016
About 3 years ago

Get proper B2L insurance. They won't tell lender. And so what if they do. They lender doesn't really want properties on their hands, particularly if you're paying and not causing any bother (along with the negative equity issue).


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