While at the bank the other day discussing options for my mortgage with one of the banks advisors, we hit upon a ‘grey-area’. I wanted to Let my property but either needed to switch to a Buy-to-Let mortgage or sign a Consent-to-Lease. A Buy-to-Let mortgage wasn’t viable due to the lack of equity in the house so my only option was to talk the bank into allowing what’s called a Consent-to-Lease. A Consent-to-Lease is a legal document that a Lender co-signs with you that says you can let out your property while adhering to the mortgage code. Unfortunately for me it wasn’t that simple…
Background
I used to live in sunny Scarborough, on the East Coast of the UK. I lived there right up until two years ago when I took a new job as Senior Web Designer at 9xb in Harrogate. I own a property on the outskirts of the town in a small village called Staxton, approximately 50 miles away from Harrogate. For the first year in my new role I commuted to and from work on a daily basis and covered over 500 miles a week. In that one year of traveling I owned three different cars…
Car 1
A Vauxhall Corsa – Written off!
In short I got side swiped my another motorist at about 50mph, causing an immediate head-on with another car traveling towards me from the other direction.
Well I lived, just, and after having three weeks off returned to work.
Car 2
A Ford Fiesta – Sold!
Once I received a payout from the first accident I bought a economical Diesel Fiesta. Unfortunately after doing 17000 miles in under half a year I ran it into the ground.
Car 3
A Ford Mondeo Sport TDCi
Which I still own, a brilliant long distance cruiser.
Obviously after the year I had it wasn’t sustainable to commit to long distance commuting anymore so I made the decision to move to Harrogate and Let out my house.
Lets have a meeting
I moved to Harrogate and Let the house out to a lovely couple who were both Radio presenters. A year later they moved out, right at the same time my Tracker mortgage deal had ran out. So I decided to go into the bank to check out the latest deals. Which is where the fun began, and conversation went something like this…
Me: I need to Let out my house. I want the best possible deal for my mortgage so my repayments are as small as possible. I understand I can’t have a Buy-to-Let mortgage because I don’t own enough Equity but I was told I could stay on my current deal and sign a Consent-to-Lease form to enable me to Let it out.
Mortgage advisor: Unfortunately since your last meeting with us things have changed in the housing market and our offerings. For us to allow a Consent-to-Lease on a property you need a minimum of 15% Equity in your house (85% LTV). Our house price indexing system currently values your house at a lower price than last year resulting your LTV being over the 85% minimum. We are unable to offer you permission to Let your house out. To fall back under the LTV minimum you would need to put down £*****.00.
In short the bank weren’t allowing me to Let my property out now because of the down turn in the housing market. Now as you can imagine I was a little annoyed and disputed a few things. Firstly their so called ‘property valuation indexing system’. They valued my house at £*****.00 less than a valuation I had from a local estate agent so I told them they were wrong.
Mortgage advisor: You can dispute this automated valuation and pay £***.00 to get it revalued by one of our registered valuers.
Me: £***.00 is too much, surely there’s another way to solve this?
Mortgage advisor: Ok sir our acceptance limit is 85% LTV if you are on one of our products (a fixed mortgage deal for example)
Me: Currently I’m not on one of your products, my Tracker deal has just ended and I’m now on a standard Variable Rate. Does this 85% LTV limit apply?
Mortgage advisor: Oh I’m not sure, I’ve never come across this before. There’s no information on the system about this. I can’t call our usual help department anymore as they have blocked incoming calls so I can only email them for an answer. Unfortunately I doubt we’ll get a response today so we can’t proceed.
I waited a week and finally got a call from the mortgage advisor saying…
Mortgage advisor: Hello Mr Hartley. It seems we hit a bit of a grey-area in our Consent-to-Lease offering. Our 85% LTV limit only applies to our products, Fixed and Tracker deals for example, but you aren’t on a product so we feel we can’t stop you from completing a Consent-to-Lease form on this reason. Using our discretion we are happy to authenticate a Consent-to-Lease on your mortgage if you wish to commence?
Me: F*** Yes I do, I’ll return the form ASAP…
In Summary
In summary, to Let out a property where you still have a mortgage on it you need your banks permission or else you’ll be breaking your mortgage terms and they could take your property off you. A Consent-to-Lease is an option but with the current economical climate hitting a rocky patch and with house prices plummeting most lenders are capping the minimum LTV acceptance to 85%. Now as I discovered with my Lender they may not have applied the same limited on Variable mortgages as you aren’t technically on a Mortgage Product. So if you find yourself in the same scenario there may be a loop hole you can jump through.
January 18th, 2009 at 7:02 pm
Since I only rent a house, I didn’t understand any of that, but I enjoyed the pictures and swearing…
October 27th, 2009 at 8:33 pm
Thats very interesting as i have a meeting on saturday with my bank manager to apply for a consent-to-lease and i deffo dont have enough equity in my property, i am on a fixed rate mortage with them but it expires may 2010. i will let you know the outcome?
October 27th, 2009 at 8:51 pm
Hi Anthony.
Remember, consent to lease is only available on the normal rate, you can’t be on a product. It’s also limited to just 3 years so it’s not a long term solution. Good luck, let us know how it goes
March 20th, 2010 at 5:40 pm
Hi,
we are now in the same situatuion.
We have no mortgage product and are on a vriable rate, and our Bank are saying we need to switch to a consent to lease mortgage of 5.49% TRACKER for 3 years.
Can we get round this as we will be moving back in around 6-12 months.
March 20th, 2010 at 7:15 pm
Hi Fay,
My experience was with the Halifax so each bank may have their own consent to lease guidelines. Basically if you are planning on renting out your property for any amount of time and you don’t want/can’t get a Buy to Let mortgage then a consent to lease agreement from your bank is the only option. Without this you are breaking the mortgage agreement you have with the bank, giving them the legal right to any proceedings they deem fit to proceed with. The ugly statement all banks have to make when taking out a mortgage applies, “Your home is at risk blah blah blah”.
Personally I find it strange that the only option is a Tracker mortgage, potentially with a setup fee too? Have you considered remortgaging to another provider who would offer a better consent to lease package? Is that an option? The only other option, one I wouldn’t advice nor champion, is to keep on the variable deal, keep quiet and see if you can get through the rental period undiscovered. Risky but a potential short term solution.
April 27th, 2010 at 6:43 am
This is incredibly interesting.
I too am with the Halifax sat on their standard variable rate but deperate to move house.
Unfortunatley mine isn’t shifting.
I don’t actually need what little equity is in the house and so could buy another right now but would potentially stuggle to pay two mortgages for any extended period of time.
This is somethimg I hadn’t considered. A trip to the bank I feel!!
July 3rd, 2010 at 4:34 pm
Hi
I am on standard variable now with halifax and need to now rent my place out. They say I need to switch to consent to lease mortgage. Rates and fee is extortionate. What should I do?
S
August 31st, 2010 at 5:14 pm
Halifax have saved me alot of headache. Not only do I have a second charge on my property I am also in arrears with my mortgage. However, I wanted to rent it out because I have found a dream job near my partner’s home and would like to apply for my doctorate next yr, renting out my home would free up my income, and I don’t want to sell in the current climate.
I was reluctant to tell halifax due to the above, I thought I should go underground and not say, but I decided to take the plunge and tell them anyway- I am too much of a worrier! they have granted permission for me to lease the flat! Thanks halifax!
so if you’re like me wondering if halifax will let you do this then give them a call you never know-they did for me. I would also advice doing some research around your own banks consent to lease criteria, each is different. Halifax is good.
September 3rd, 2010 at 7:17 am
Hi all,
Further to my post in april and as a result of seeing mariah’s post today.
We went to the bank, to the good old Halifax and were told two things.
1) they believed we were now in negative equity. They valued the property at 105k when we’d bought it two years previous for 125K (pretty responsible lending that eh??)
2) were they able to revalue the house to put us in some level equity I’d have to pay for the revaluation and then I’d have to come off the SVR onto their CTL rate, again at 5.49%.
I can only think they value the property so low due to a house 5 doors down being sold cheaply the year previous (grandfather to grandson for £80,000) and so it skewed the curve.
Anyhoo, I’ve since sold the property for 115k and have bought another at what was a bargin price.
Although I’ve lost 10k plus 2 years of interest payments I could have saved by renting instead I’ve probably saved a similar amount on my next purchase up. I’ll forget all about it in a few years time no doubt.
take care all
October 5th, 2010 at 9:38 am
I’m also having issues with Halifax – basically i’m now on the SVR since my last deal ended and am renting out the property but they told me to give consent it would require me to move onto a specific product at an arrangement fee of ~£1000 and nearly doubling the interest from the current SVR
My partner with another building society managed to get consent with no payments or increase in interest on her old residential mortgage which is also on SVR.
I don’t know how long i want to rent the properrty out for so do not feel willing to pay £1000 for double the interest and then an early redemption penalty if i change my mind! Would they really take proceedings if i just rented it out without formal written consent and stayed on the SVR? (of course ensuring i never miss a payment which i have never done and don’t ask for any other deals e.g. payment holidays etc).
October 5th, 2010 at 9:57 am
@James
It sounds like either Halifax has changed their policy on consent-to-lease mortgages or you have spoken to an advisor who has given incorrect information. Personally, I wasn’t allowed to be on a product and was forced to take the only option available, an SVR mortgage. Technically if you fail to get consent from your bank to rent it out then you’re breaking the terms of the mortgage deal and are leaving yourself open to be penalised. Of course you can take a risk, rent it out and cross your fingers but I’ve found it’s best to get the consent before proceeding. Letting agents require this consent-to-lease on the property before they can legally market the property, otherwise they’d get into trouble too. Also, if you have trouble with the tenant you may find yourself less protected with out a consent-to-lease mortgage. Maybe you should contact other banks and building society’s to see if they can help?
October 5th, 2010 at 10:52 am
thanks, that’s helpful – i may phone annymously and ask again. It looks like there isn’t enough equity in the property to move to a BTL deal, and researching the website looks like they have quoted me on a ‘normal’ mortgage at 90% LTV in order for them to give consent to let. Unless i sign up to this and pay the hefty arrangement fee (and 3% more interest than current SVR!) they implied consent would not be given
On further questioning though they did say on record that worst likely case scenario would be freezing the mortgage product meaning the loan is fixed and other benefits available to residential customers (e.g. payment holidays) could not be taken and they may need to consider writing at some point in the future and reviewing the interest rate – I can live with this!
Be interested o hear any more thoughts on that.
I rent it privately but have got freeholder consent (it’s a leasehold) and buildings and landlords contents insurance all without any issues.
October 11th, 2010 at 7:50 am
@James, thanks for this, am in exactly the same situation as you re: Halifax. Was blown away at their surcharge and the rate quoted.
Am likely to take the risk, continue to take my grand or so a year profit (as opposed to the grand or so loss a year after interest rate hike, plus the extra 1200 on my mortgage for charges). If they want to freeze payment holidays etc and write to me good luck to them. If they want to repossess a property that is in negative equity by 15-20 grand as opposed to me never miss a mortgage payment for the next ten years then good luck to them!
Lets hope the property market grows over the next few years!
February 7th, 2011 at 7:29 pm
Very interested to read all of this Re: the Halifax. Am having exactly the same problem. Am currently in dispute with them re the outrageous fee and interest hike. Am tempted to do as you plan to James and wait to see what they come back with. The bizarre thing is, the rate they ‘freeze’ the mortgage at is less than they are asking me to pay over a grand to move onto! Hardly tempting. Feel SO aggrieved they are ripping me off am considering complaining to ombudsman.
April 12th, 2011 at 11:10 am
Hi Gary,I had the same predicament last Spring.I rented out my flat and was on the Halifax SVR.I arranged the meeting in branch and was really worried about what they were going to charge for the Consent to Lease letter.Turns out all i hadto do was take out their contents insurance and the Consent to Lease letter was all signed up.HOWEVER i have just called up the Halifax regarding this SVR refund that’s due and according to the Halifax employee my Consent to Lease isn’t showing anywhere on their system!In short they want me to go back into their branch and confirm that everything is in order.Luckily i have the paperwork that i had signed off from my original meeting but i’m still sh*tting myself that they forgot to charge me a fee of some kind.I think i have every right to refuse paying any fees as they weren’t mentioned when i had my original Consent to Lease agreed.Any thoughts?
Thanks.
April 15th, 2011 at 12:34 pm
I think I know why the halifax have changed their policy.
Over the last decade, budding landlords have been buying properties on residential mortgages, seeking consent to lease and building their portfolio that way on lower rates than regular buy-to-let landlords, with lower deposits, and then 3 years later when the consent expires, they’ve built enough new equity to switch to a regular BTL mortgage and continue building their empire.
So basically now everyone who wants consent to lease is treated as being a buy-to-let landlord. I want to move out and rent out my house because I’ve lost my job and I can’t sell it, but if I do rent it out I have to pay a £1,500 transfer fee and my interest rate goes up from 3.5% to 5.7%!!! And if I do move back in I lose my 3.5% interest rate and have to pay 3.99% instead!
11 years ago I sought consent to lease from the same bank (Halifax). I paid a £100 admin fee, kept my interest rate as it was, went off and did what I had to do, came back a year later, moved back in and life went on.
I feel really aggrieved but sadly there’s no way around it.
April 21st, 2011 at 10:21 am
UPDATE:I have discussed my Consent to Lease with the Halifax and they are stating that i will haveto go onto new product even though i have all the official paperwork from when i visited the branch to say that i did not need to go onto a new product.Why should i suffer because of their error?!?
I’ve decided to make a formal complaint and if that fails i’m going to the financial ombudsman.
April 26th, 2011 at 11:41 am
I am currently on a fixed term mortgage that ends at the end of the month, i already have a consent to lease that ends at the same time. I spoke to the Halifax and they offered the consent to lease mortgage for a 1200 fee and a slight interest increase from what i am currently on. Okay i thought, what i forgot was the drop in interest rates since i took out the mortgage, until the halifax themselves sent me a letter telling me my fixed term was due to end and i was going on to the svr. The payment is 40% less a month on the svr,and no £1200 fee. How is that legal, they are just taking advantage of people trying to rent out their property. I dont own a string of properties so am not trying to pull anything, i’m just glad i didnt sign the papers for the consent to lease! I’ll see what happens next
June 13th, 2011 at 2:13 pm
I’ve been on a fixed rate of 5.9 for the last 3 years with Halifax and am about to go down to 3.5 SVR. However they will not let me go on the SVR because I moved to Switzerland last year and went onto a consent to lease.
(BTW, I moved to Switzerland to earn a higher salary in the bid to get off interest only…I’m going nowhere financially and have been pouring my hard earned cash into interest payments for Halifax).
I have the opportunity to put more money in to take it to 70-75% LTV but they ar still saying I have to renegotiate at a higher consent to lease rate. It is also impossible to switch from a consent to lease to BTL rate with them, this transfer is simply not an option.
So, I said to them that I will be forced to change banks. Bank of China for example has a SVR of 3.88 available on BTL for the lifetime of the loan at 75% LTV.
Halifax are milking their loyal customers if you ask me. Funnily enough they did ask me to call them before I choose to make a deal with another lender. I really wonder what they will say, are their rules flexible after all? I have 3 months to work out what to do, and do not plan to be taken for granted when Im having to knuckle down to find this extra cash to avoid high rates for another 3 years as a single lady.
June 14th, 2011 at 9:58 am
These comments really interest me. I too am in the same situation as many of you above, also with the Halifax. My product is up end of June, the same time as my consent to lease. Likewise I am no landlord with a portfolio but someone who moved to Australia to peruse a career. Halifax now want to put me on a new 3 year consent to lease product and charge me 1400 for the pleasure. I have rented under a consent to lease for the last year, swallowing a hit and will continue to do so more substantially should I move to the only product Halifax are offering. I have no equity to move providers and feel bullied into the only option available to me. I feel let down by the bank for jumping through all the right hoops 12 months ago. The lesson learnt for me is to not be so honest!
Anyway, I am after advice as I have not made my decision on how I proceed. What happens if I leave my product roll onto the SVR with no consent to lease? Doing this I will continue to pay my mortgage every month as I have always done.
June 23rd, 2011 at 2:15 pm
If Halifax know you are leasing the property, they assume you are still letting when your consent to lease ends if you do not contact them, they put you on the svr for 2months then add the extra 1.5% interest on anyway! Oh, and they tell you you are in breach of the mortgage conditions as you have not seeked permission. They also ask you to contact them, where it goes from there i dont know!
June 24th, 2011 at 5:38 am
Seems like we’re all in similar boats with Halifax being the common denominator.
I’ve been on a tracker and since the BoE rate is so low it’s been fortunate. My old consent to lease agreement is up and I need to renew for another 3 yrs but Halifax says that in order for me to get their consent I have to choose from their 2 consent to lease mortgage options: 1 – a fixed that’s 4% more and comes with a 1500 fee or 2 – a tracker that’s 5% more with a 500 fee.
Does anybody have any sort of resolution on this? Is there any way around this? I’m looking into other banks and what they can offer too.
July 3rd, 2011 at 7:53 pm
Very interesting reading! We have a mortgage with the Halifax and the product had just come to an end. Our Consent to lease has also ceased. We have been told to pay £1500 fees to move to a new CTL product. (the same deals as Victor above)
Can we apply for a new mortgage on the SVR then apply for consent to lease on this? Or can i continue with the Halifax on their SVR without getting into trouble in the future?
please help!
July 4th, 2011 at 1:03 pm
Deborah, Halifax advised me that I could not go on the SVR and then reapply for the consent to lease. I am almost out of options. My last option is really to see if I can go onto their consent to lease but on an interest only setup. Whilst not ideal it will at lease solve my short term problem of rent not covering my mortgage and whilst I’m over in Australia, it seems the only viable option.
I just wish Halifax offered a little more flexibility. I appreciate they are a business and that you can’t have a rule for every individual but if they had an ability to use a little more discretion we would all be happy customers!
July 4th, 2011 at 1:51 pm
If you have already arranged a consent to lease with Halifax and your deal is up they will not let you go onto the lower standard variable rate as it says in your current deal. You must take a higher consent to lease rate and maybe pay a remortgage fee for the trouble.
If you do not speak to them when you are about to slip into the SVR they will automatically increase your existing rate to a their new consent to lease rate. If you are smart you will negotiate not to pay a remortgage fee, and negotiate the consent to lease rate they propose.
Other banks will not accept a remortgage for a new residential loan with consent to lease terms attached – you would have to take a Buy to Let mortgage.
Halifax will not let you transfer from a residential loan to a Buy to Let mortgage with them.
To get a good Buy to Let interest rate with a new bank you need to have at least 25% equity. This rate will still be higher than the attarctive standard variable rate you were about to go onto with your current Halifax mortgage.
From my research it is clear that Halifax is the main bank enforcing these stipulations. In the old days you only had to pay 100 quid and they let you rent it out on the same mortgage deal as you have now. Many other banks still do that today.
For all the reasons above, I have decided to sell my property. It went on the market last week. The Halifax has had me on high interest rates on two different deals for the last 5 years due to low equity. Whilst the GFC is not their fault they have not offered any assistance _such as competitive market rates after all this time. They took maximum money before and after the GFC I am sick and tired of paying Halifax over and above. I also refuse to put more money in and pay them another chunk of fee’s – that cash is hard earned and they will want more in another 3 years once more… it is endless.
July 6th, 2011 at 6:22 pm
Hi there,
Halifax have me over a barrel too. I’m no buy to let investor just a guy who rents out my original house to work in far flung corners of the world.
Initially in 2005 consent to lease was just a bit of paperwork, a formality. Then in 2008 I had to renew the consent and took this opportunity to take a new product which actually reduced my payments from SVR that I’d been on. In short I got a good deal.
Fast forward to 2011 and the good natured and good deals are gone. Halifax has got dirty. They won’t renew my consent to lease this time unless I switch to a buy to let product. They won’t let me stick on my existing residential mortgage with consent to lease. And low and behold it’s works out 40% more expensive per month in payments than my current product! I can’t even sit on the SVR as they say I’d been in breech (no longer having consent) and they would start proceedings against me.
No more mr nice guy! They’ve given me only 3.5 weeks notice with this also!
Thanks Halifax. To cap it all they want a 600 pound product fee for the privilege of ripping me off. I had to laugh when they said with this product they’d be indefinite consent as if reassuring me that they wouldn’t rip me off in another 3 years would make me feel better.
July 13th, 2011 at 1:26 pm
Yet another ******-off Halifax customer. Couldn’t sell my flat, so rented it out instead. On a SVR of 3.4%, now they tell me my CTL has expired and i have to move to one of their CTL mortgages at 5odd% plus £1500 fee or 6odd% plus £500. Virtually doubling my payment overnight.
How can they get away with this? True rip-off merchants, i can’t kick my tenant out, i can’t sell because i’ll lose money, i can’t get a BTL because i haven’t got enough equity, i’m already on interest only. They are just screwing us over again and again…even the call-centre bloke agreed with me.
July 14th, 2011 at 10:00 am
I have decided to do something about this, maybe you will too:
complaint.info@financial-ombudsman.org.uk
August 2nd, 2011 at 11:53 am
Same problem with me guys.
Halifax agreed to offer me a consent to Lease in february 2011 but i had to go on a higher Fixed rate with a £1500 fee. somehow they never recived my signed paper work back and then last month i recived letter form them saying that they have increased my SVR by 1% as i dont have CTL and i was breaching my mortgage terms by renting out. So i called them back and was informed i had to go through the application again before they can reconsider my CTL on a new higher rate.
By this time i have already rented out my house.
As soon as i mentioned my tenats were recieving Housing benefit they closed the book on me and said they couldnt proceed and could not offer me CTL.
my option to change the tenants and re-apply. i cant get rid of the tenannts as they have 12 month agreemetn in place and are a decent family who pay rent on time.
Halifax said that the case is now flagged with their legal dept and its upto them how they wish to proceed.
i have never missed any payments and not able to sell the property at the moment – im worried about their legal action,
Anyone know what i can expect form halifax
August 20th, 2011 at 5:19 pm
I am in the same boat, moved jobs and tried hard but could not sell, so had to let at less than the mortgage interest! so am paying for someone else to live in my house! ( i dont blame halifax for this ) but just forced me to renew my CTL at £1499 and lost the SVR rate of 3.5% Started CTL on a product 3 years ago at £499 then paid penalty of £1700 to move to SVR as it was going to be better, really annoyed they now wont let me stay on svr or offer me a better deal. they have put me back by thousands, ( when you add in the interest on the charges for the term of the loan ) I know you have to pay but this is a joke. it is legal robbery. Cant move to BTL as the equity is not good enough. have been trying to pay as much as i can extra to mend the LTV which has been going up as the property has been going down. Should have gone bust …it would have cost less…..’a little extra’ well yes for them certainly not for me!! you try to do the right thing and pay your debts, the Halifax should be ashamed of how they treat good customers who are in a genuine fix. it aint fair!
September 1st, 2011 at 10:53 pm
I ve just been in touch today with Halifax,wish id read all these posts first.I was enquiring about leasing my property to the council.needed permission,thought they would charge something.Shocked £999. and fixed rate I think till 2014.DIDNT realise Id need to pay again ,and again every time it ran out.Sam said he was told the type they were offering was “indefinate consent” I must ask the question of them,was that what they were offering me. 18 years ive paid NEVER missed a payment.Now I feel ive put my head above the parapet by asking,he said “ive put a note on your acc” in case I decide to go ahead and what ( they can watch me now)ever wish youd kept your mouth shut….ANYONE know of where to get a good BTL .deal..
September 1st, 2011 at 11:16 pm
the sad thing is now that you have raised this Halifax will not leave you alone. They will default to thinking you are renting the property anyway unless you send them reams of evidence to the contrary.
September 2nd, 2011 at 8:48 am
alana – you can ask for indefinate period if your LVT is less than 75% . wish mine was!! there are 2 options on the consent letter – one of which they mark as applicable. 3 years or continual. dont know though if you will need to pay for a new product every so often, check it out
September 2nd, 2011 at 2:34 pm
What I dont get is that the consent to lease is for an indefinite period, but the indefinite period is only available if you have a LTV of under 75% (so they know you are not making money). They review the indefinite period by putting people of 3 year deals to make them renew and pay more fee’s.
Please keep in mind everyone that you can redirect your post by up to 2 years, and rent out your property, even with tax paperwork. I know, because I did it.
And as I said in an earlier post, I just sold my house and am now buying a place at a lower value for an investment which with a higher LTV on a BTL loan with Bank of China for 3.88% for the lifestime of the mortgage. Goodbye Halifax.
September 7th, 2011 at 7:26 pm
I’m considering renting a room in my 2 bed flat for about 10 months. I’m wondering if all this kerfuffle is because the owners aren’t living in the property while it is being rented. After reading an older post, saying they flag your account if you even ask about it (!?) I’m wondering if anyone has any advice on what the likely outcome would be if I requested consent to lease while still occupying the property?
September 14th, 2011 at 3:39 pm
M. I dont recon having a lodger is the same as creating a ‘tenancy’ If you are still in occupation you are not leasing the property as such. I would read your original paperwork and see how you stand on the score of lodgers in relation to your mortgage. it should be mentioned I feel sure.
Before you even call them regarding CTL and rock the boat
September 14th, 2011 at 8:29 pm
Renting a room to a lodger isn’t in the same boat. As it’s only just for 10 months I’d just go ahead with your plans without consulting them.
September 14th, 2011 at 9:37 pm
thank you Keith and Sam. I did contact the bank (Halifax) and they were very relaxed about the whole thing. As you’ve said, its not going to affect my current variable rate mortgage, as I would still be living at the address. They’ve asked me to formally write to their consent to lease team to get formal consent, but the rep said its just a formality. Its a maximum of 2 people, and I can’t alter the property while the tenant is residing there, but that was never my intention. So a good result so far. Perhaps when I do get the formal reply, it may be a completely different result altogether. However, so far so good.
September 15th, 2011 at 5:47 pm
Useful to read through all the comments. I am in exact same position with Halifax – bizzare that what they are offering me means that its actually cheaper for me not to let the property and keep it empty!!
I went to a couple of brokers who said my LTV has gone from 75% to 82% based on the decline in the market so no-one will give me a buy-to-let.
What really bugs me with Halifax is that you would hope they would be a little humble given a fair chunk of the current economic crisis can be put to their door – but they are not. They don’t want us as customers, so they would rather see us go bankrupt than cut us some slack until the market shows signs of growth and we can get a decent rate again!
September 29th, 2011 at 7:27 pm
Same thing happened today with the same bank, been with them 12cyears, never missed apayment and they now tell me I have to take out another product with the associated fees & interest! I took out a mortgage with them last month (with all the fees etc) and not oncce did they tell me I would be better to combine the motgage and therefor pay only oneset of fees etc!!!
Ripo off Bxxxxxxs
October 10th, 2011 at 10:48 am
Sorry to hear there are more people in the same boat. Accidental landlords are being squeezed by the nether regions. I’ve just done my bit to improve HBOS/Lloyds balance sheet and started the process to get out. The new deal (Cov BS) ain’t as good as a residential mortgage but it’s a darn sight better than the BTL that Halifax was offering for all my ten years of good business! I was lucky, plenty of equity made me attractive to other lenders although many still did turn me down as I don’t have more than one property being an accidental landlord.
Good luck to all out there in these tough times.
October 13th, 2011 at 2:45 pm
Does anyone know if I still need consent to lease, if I just do holiday lets for a number of weeks per year? And still live in my flat sometimes?
November 8th, 2011 at 4:20 pm
can any one help, my mortgage is due to expire at end of jan my house is being rented at the moment but not sure where i can get a mortgage because got a low amount of equity,
1 should i get a loan to pay off some of my mortgage
2 see my lender to see if they will allow me to a consent to lease
3 or stay on standard rate if they let me
or are there any other options thanks
November 9th, 2011 at 7:03 pm
What’s your SVR?
November 16th, 2011 at 6:57 pm
I’ve had issues with Halifax around CTL, however I’m pretty sure my biggest headache is yet to come when my fixed mortgage product (5.95%) finishes in May 2013.
I purchased my flat at a re-possessed rate of £106k in May 2008 putting down a 10% deposit and spending a further £5k to modernise it throughout. I have since been on an interest only mortgage for the £96k mortgage. The housing market being what it is I’m almost certainly in negative equity.
According to Halifax’s indexing system as of May 2010 I was surely in negative equity; I pretty much had to beg for CTL from Halifax and luckily read up online before I enquired so I knew what line I’d have to take. At the time I was wanting to re-locate for career purposes, however being self employed and income not being guaranteed was a big factor for my CTL application. The reason for my CTL was that I could not afford to pay the mortgage on my unstable income and moving home to my parents would allow me to save up money to pay my mortgage should it fall into arrears.
They gave me CTL for up to 3 years from May 2010 – with permission to have subsequent tenancy agreements – so long as they didn’t exceed May 2013 when the CTL expires. This also happens to be when my mortgage product also finishes in May 2013.
My first tenant moved into my property in June 2010; I had to send a form to Halifax with details and length of the tenancy. The tenant moved out in May 2011.
12 month after my CTL application was made, in May 2011 I received a letter from the Halifax saying ‘now that your CLT has expired please contact to update us on your situation’. This was not accurate as I have a letter which has given me CTL for up to 3 years.
Even though I was planning to let the property again, I moved back into the property from May 2011 to November 2011. I ignored the above letter, deciding not to contact them, knowing I had a letter from Halifax dated May 2010 giving me CTL up until May 2013. I’m aware Halifax might have been likely to change the goal posts in relation to my CTL, therefore I would rather claim to have not received the letter if they query any subsequent tenancy agreement.
During the six months that I moved back into my property I did update my address details with Halifax, however they did not contact me. I have now moved out of the property to live with my boyfriend; he has a much smaller mortgage (he also has a lot more equity in his property) and so it is better for us both to live at his property where there are reduced costs, particularly given that we are both self employed with unstable income.
I now have a new tenant in the property on a 12 month contract as of November 2011. My current tenant passed the Full Tenant Referencing required for me to take out Landlord Guarantee Insurance. I am about to take out a policy; not only will this give me peace of mind, but it will also keep Halifax happy if they query my CTL circumstances and how I plan to reduce the risk of the mortgage falling into arrears. At the end of the day, other than wanting to make their customers pay through the nose, they want to ensure they are paying full stop.
I am aware that not contacting Halifax in May 2011 – and then re-renting my property in November 2011 – was a bit of a risky move, however since I have CTL in writing up until May 2013 I’m pretty confident that I have a strong case to argue any breach of mortgage agreement they may claim.
However, in order to play by the rules, I think I now need to contact them with details of the new tenancy agreements. I’d also like to update them with my correct postal address, putting my living situation and CTL continuation out in the open, rather than diverting my post.
So I’m wondering what people think?
Should update them on the current tenancy situation by means of a letter with the tenancy details, or should I simply update my address and see if they contact me?
At the worst I can always produce the 3 year CTL letter saying I did not realise I needed to do anything else, particularly given that I have had no contact from Halifax relating to it.
Also, given that I’m tied into my fixed mortgage deal until May 2013 – at which point my CTL will expire – with no (if not negative) equity in my property it looks as though I will struggle to get further CTL based on what I have read above. I’ll need CTL because I don’t think selling will be an option for other technicalities I’ll mention below. I don’t want to be forced to move back into the property and feel as though my life is being controlled by the bank.
I’d like to think that I would be able to sell it at that point, however if it is still in negative equity that won’t be an ideal option, and more so the property has been a bit of a nightmare investment. The property is a flat block in a converted mill with the flat itself being very spacious and quite unique. However the overall block is something of another story; the managing agent in place when I purchased the property, unknown to me, were cowboys. Though not obvious at the time of purchase, or raised by the surveyor, it was pretty obvious a year later that the building was not being property maintained and that certain aspects of the building had fallen into dis-repair.
I have since worked hard with the other owners – mainly landlords – to put a new managing agent in place. The property is now looked after well by a good managing agent, though there is a lot of work to be done that is going to costs me money. Whilst I’d like to think that I could start making capital payments onto my mortgage to bring the interest down and the equity up, however any spare cash I have is going towards the maintenance of the property. The fees I pay to the managing agent are already £105 per month for the basic maintenance; cleaning, electric, buildings insurance, garden, repairs, etc. Further ad hoc fees are due to arise for essential improvements that will maintain the value of the property and continue to attract renting tenants; CCTV, carpets, painting, windows, improving security, etc. As an example, due to the previous poor management the windows have started to rot as they were not cleaned or sealed properly on a regular basis. As a result replacing all of the windows of the mill building could cost in excess of £110k; approx £5k each for the 22 owners.
This isn’t exactly a good selling point! And so unless I sold it at a bargain price, leaving myself with a large chunk of debt, there’s not much point in me selling it until the property has been turned around and restored to its former glory.
Also, given these additional costs and me being self employed, unless I had a windfall I’d really struggle to find £21k to bring the LTV to 75% – and that’s basing my property value on a generous (but unlikely by the Halifax indexing system) value of £100k!
Therefore, in terms of me getting CTL from May 2013 onwards, what do people think is the best option to plan for…?
Sorry for the long post – and thanks if you’ve taken the time to read it
November 17th, 2011 at 4:27 am
@lewis, I’m assuming you already have consent to lease with the bank you have your mortgage with so you should just be able to remortgage with that same bank. Most of the people on this blog are with Halifax (and are unhappy with it b/c of how they treat their customers). Call around and see what different banks are willing to offer. Some of them will provide mortgages as long as you have a 75% LTV (Loan to Value [of your home]). If you do not have that, then I’m afraid that I can’t help with any advice as it is unfamiliar territory for me.
Best of luck.
November 17th, 2011 at 5:06 am
Just thought I would follow up on the post I made on July 4th, 2011 at 1:03 pm.
I have conceeded to Halifax not to a happy end. I agreed to take the only product being offered which left me contributing 110 pound per month as my rent failed to cover the mortgage. I also stumped up the 1500 pound arrangement fee and had to accept the ridiculous terms that accompany the mortgage. One of which is is the never reducing early repayment fee.
I have subsequently switched the mortgage to interest only as this is the only slightly affordable option. I did write a letter expressing my feelings to the Halifax and have assured them I will be taking my business elsewhere once that becomes possible.
My overall experience was a negative one. I spent many hours on the phone, passed from person to person.
I wish you all good luck in resolving your issues with the Halifax.
November 17th, 2011 at 9:37 am
Re. my earlier post. i did a written complaint, after having to pay the £1499 to renew the CTL. and a much bigger monthly payment ( more than the rent ) They did not want to know. they said it was ‘commercial’ and could charge what they saw fit and change the terms at each renewal, so we dont have a leg to stand on with a complaint to the Ombudsman. Will – like you Rhys just have to look for another lender when the term is up.I really wish now I had gone down the route of repo. it would have cost less! no wonder there are so many repos, perhaps the halifax prefer that, to reliable people like us who try to keep their end of the bargain and pay their mortgages!! I can understand it if you are renting for gain, but when you are working away and just renting the house to cover the loan and can prove that, then they SHOULD give you some slack. No wonder they can afford a free £100,000 lottery with this legal theft of funds from hard up customers like us,. Keith.
November 17th, 2011 at 9:44 am
I just got out and good riddance to Halifax. I’m now with Coventry BS. It’s a BTL to not as cheap as my previous residential. The product choice of competitors wasn’t great though, many didn’t want to know as I was an ‘accidental’ landlord and as a result don’t own the property I live in. Shopping around wasn’t that easy, I’m afraid and I have 40% LTV!
November 17th, 2011 at 2:13 pm
@ victor ; thanks but unfortunately i dont have 75% LTV, and do not have consent to let
i have a regular mortgage at moment and am renting my house out, thanks just wanted some options of what to do, do i
1) dont tell them and stay on standard rate
2)ask them for consent to lease
3)get loan to pay off some of mortgage so that i have 75%LTV
ANY HELP WOULD BE GREAT
November 17th, 2011 at 2:23 pm
1) You’ll stay on the SVR for the foreseeable future, have your BS ever come around your house?
2) They’ll say no (if it’s the Halifax) and insist you take a BTL product. There best product works out at about 5.6% apr, not very competitive. Plus they’ll charge you at £600 for the privilege of ripping you off. All other lenders of next choice will refuse you as your over the 75% LTV.
3) You’re unlikely to get a loan at as good an interest rate as you SVR. So the sums don’t add up.
November 17th, 2011 at 10:28 pm
My advice, just say nothing. The people that give you extra! Yeah, extra charges, extra monthly payments, extra headaches. I have banked with Halifax all of my 31 years of life and because of this i have left, although I am stuck with my mortgage, but they have me over a barrel.
November 17th, 2011 at 10:58 pm
@Victor
I told the truth, jumped through all the hoops, filled out all the paper work, and have subsequently paid all the fees and the higher mortgage repayments. Telling the truth was a mistake in my view.
November 17th, 2011 at 11:09 pm
Hear hear. Rhys.
November 17th, 2011 at 11:21 pm
tell them nothing. They sent me all the letters claiming that i had breached the agreement, stating unauthorised tenancy etc and threatening to raise interest etc. I wrote a strong letter stating that that their accusations were false etc. At the end of the day they have to prove wrong-doing and there are other laws prohibiting them digging through other personal information i.e. the Data protection Act so even if they found out to the contrary they cannot use this information against you without revealing the sources of information proving you were renting out the property which in itself could well be breaking the law. Also in the current economic climate forcing all home owners who rent out properties for the short term to take out inflated mortgage products on consent to lease could actually result in people defaulting on mortgages which surely would be worse than leaving things as they are with reliable mortgage repayments. I believe it is a battle of wills. Just send a signed letter stating their accusations are false and await their proof otherwise. Obviously bear in mind that if you were to ever need a mortgage in the future though, you would need to stay clear of this provider and seek one who is more customer focused and one which has customer needs in mind rather than a money grabbing, disgrace of a company who was bailed out in any case by the UK Government.
November 17th, 2011 at 11:23 pm
and if you haven’t told them or raised the issue then keep your mouth shut would be my advice
November 17th, 2011 at 11:35 pm
I wouldn’t loose any sleep on it. My CTL expired in June 2011. I spoke to them and they told me the position and gave me the quotes for a new (crap) deal. I ignored them. I got the letters each month. By the August they put a 1% penalty on the SVR but just kept sending the letters, I just kept ignoring them. I got another letter last week just before the remortgage went through. It was exactly the same as the letter sent through in August. I’m not sure how long they planned to keep sending the letters. I guess they were happy with there 1% Christmas bonus. Stick with your SVR. You’ll be fine.
December 12th, 2011 at 11:28 pm
@Rhys,
Sorry to hear about that. I’ve just recently gone to the new product so I can’t say yet whether or not it was a mistake. I had concerns that they would contact my tenant or letting agency and would cause even more problems for me. Luckily my rent still covers my mortgage (just barely) so I guess my scenario is the best that I can hope for at this point.