Understanding 'Consent to Let' When Renting Out Your Property

If you're a homeowner considering renting out your property, you might come across the term 'Consent to Let.' It's essential to understand what this means, especially if you have a residential mortgage and are thinking about becoming a landlord. This blog will explain what 'Consent to Let' is, why you might need it, and what's typically involved in the process.

What is Consent to Let?

'Consent to Let' is formal permission from your mortgage lender that allows you to rent out your property to tenants while you still have a residential mortgage. Without this consent, you could be in breach of your mortgage agreement, which can lead to severe consequences, including fines or demands for immediate repayment of the mortgage.

Why might you need Consent to Let?

There are several scenarios where you might seek 'Consent to Let' from your lender:

1. Job Relocation: If your job requires you to move to a different city or country temporarily, you might want to rent out your home instead of selling it.
2. Moving in with a Partner: You may decide to move in with your partner and want to rent out your property rather than sell it right away.
3. Inheritance of Another Property: If you inherit another property and choose to move into it, you might decide to rent out your original home.
4. Market Conditions: If the property market is not favorable for selling, renting out your property can be a practical short-term solution.
5. Travel or Extended Time Abroad: If you're planning an extended period of travel or a stint working abroad, renting out your home can help you cover the mortgage costs while you're away.

What's involved in getting a Consent to Let?

Obtaining 'Consent to Let' is not a straightforward process, and different lenders have different requirements. Here's a general outline of what's typically involved:

1. Contact Your Lender: The first step is to contact your mortgage lender to inform them of your intentions and request 'Consent to Let.'
2. Application Process: You'll need to fill out an application form provided by your lender. This form will typically ask for details about the reason for letting, the proposed rental period, and information about the prospective tenants.
3. Fees and Charges: Some lenders may charge a fee for granting 'Consent to Let.' This fee can vary significantly between lenders.
4. Interest Rate Changes: Your lender might adjust your mortgage interest rate when granting 'Consent to Let,' often switching you to a higher rate than your current residential mortgage rate.
5. Insurance: You will need to switch your property insurance to a landlord policy, which provides coverage for rental properties, including public liability and loss of rent.
6. Tenancy Agreement: Ensure you have a formal tenancy agreement in place. Some lenders might require a copy of this agreement as part of their consent process.
7. Renewal: 'Consent to Let' is often granted for a specific period, typically one year. You might need to renew this consent if you continue to rent out your property beyond the initial period.

Conclusion

Obtaining 'Consent to Let' is a crucial step if you're considering renting out your property while holding a residential mortgage. It ensures you stay compliant with your mortgage terms and avoid any potential legal or financial repercussions. By understanding the process and what’s involved, you can make informed decisions and smoothly transition into renting out your property.