Understanding the need for Consent to Let when renting your Residential Property in the UK

Have you found yourself in a position where you need to rent out your home because of a change in circumstances? If so, this blog will tell you everything you need to know about gaining permission from your mortgage provider. In this blog we’ll explore what a consent to let entails, why it may be necessary and how to navigate the process successfully.

What is a consent to let?

A consent to let is a written agreement between you and your mortgage provider giving you permission to rent your property out for a specific period of time, whilst staying on your current residential mortgage. A consent to let is used when you have a change in circumstances and need to rent your home temporarily and is not a long-term solution.

Why is a consent to let necessary?

Most residential mortgages in the UK are granted on the condition that the property will be owner-occupied. Therefore renting out your property without gaining a consent to let may violate the terms of your mortgage agreement. This could result in your lender demanding you repay your mortgage in full immediately.

The difference between a consent to let and a buy-to-let mortgage

While a consent to let and buy-to-let mortgage both involve renting out a property they differ in their terms and implications for homeowners. As we have covered above, a consent to let is the process of obtaining permission to rent your property due to a change in circumstances whilst staying on your current residential mortgage. A buy-to-let mortgage, on the other hand, is a mortgage specifically designed for properties that are purchased with the explicit intention of being rented out. Unlike a residential mortgage which assumes owner-occupancy a buy-to-let mortgage recognises that fact the property will be rented to tenants. Buy-to-let mortgages often have different interest rates, lending criteria and deposit requirements compared to residential mortgages. Lenders consider factors such as potential rental income, the landlord’s financial stability and the properties marketability when determining the terms of a mortgage.

How to gain your consent to let and what to expect

In order to gain a consent to let, you typically need to follow these steps:

1. 1. Review your mortgage agreement: Familiarise yourself with your mortgage terms and look for specific clauses relating to the letting of your property.
   2. Contact your mortgage provider: Once you have familiarised yourself with your mortgage terms, contact your lender and inform them of your intentions. They will provide you with the necessary information and guidance on the process. Usually you will need to fill out the required documentation to full submit your application for a consent to let.
   3. Provide specific information: Your lender may require specific details on your rental plans. This can include the tenancy term and monthly rental amount.
   4. Understand potential implications: Whilst gaining a consent to let it is important to be aware of any potential implications. Your lender may charge and administration fee for processing your request and potential increase you interest rate for the duration of your consent to let.
   5. Await lenders decision: Once you have submitted all the required information to will need to await your lenders response. The timeframe for their decision varies from lender to lender. Depending on the urgency of gaining your consent to let it is advisable to follow up if you have not heard back within a reasonable timeframe.
   6. Gain confirmation of your consent to let: If your lender approves your request, they will provide you with written confirmation of the consent to let. This document serves as proof that you have obtained the necessary permission to rent out your property while maintaining your residential mortgage. Always keep a copy and provide one to your letting agent for them to keep on file.

Reasons you may be refused for a consent to let

In some cases lenders may decline a consent to let due to various reasons such as internal policies, the property’s mortgage terms, or the property owner’s specific financial circumstances. You will need to be up to date on all payments to be considered for a consent to let. If your request is denied it’s crucial to assess your options and seek advice form a mortgage advisor or legal professional. You can explore alternative solutions, such as switching to a buy-to-let mortgage or reconsidering your rental plans.

What happens at the end of a consent to let?

As your consent to let is only granted for a specific period of time it is important to understand your options at the end of your consent to let.

1. 1. Renewal of consent: If you wish to continue to rent your property, you will need to renew the consent to let with your lender. Make sure you contact your lender well before the expiration of the initial period to discuss the renewal process. The likelihood is they will require updated information and documentation regarding the rental agreement and may impose new conditions or terms.
   2. Transition to a buy-to-let mortgage: Depending on your circumstances you may now have a long term rental plan. If so you will need to transition onto a buy-to-let mortgage. Speak to your current lender as well as a mortgage advisor to make sure you get the best buy-to-let product available to you at the time.
   3. Sale of the property: If you no longer wish to rent out your property or cannot proceed with either of the two options above, you may consider selling your property. Selling your property allows you to repay your existing residential mortgage and look at other investment opportunities.
   4. Return to owner-occupancy: In many cases, homeowners wish to end the rental agreement and return to their property. If this is your intention, you will need to notify your lender of a change in occupancy status and adhere to any terms or notification requirements outlined in your consent to let.

Conclusion

In conclusion, obtaining a consent to let for a residential mortgage it a critical step for homeowners who wish to rent out their properties. It is essential to understand the implications and follow the necessary procedure of your lender. Please note that specific mortgage agreements and requirements vary, so it is advised that you review your individual mortgage terms and consult with your lender for specific details on your situation. If you have any questions about gaining a consent to let, you can discuss with the Prime Residential team on 0161 241 3335 or email us at [email protected] Disclaimer: This blog is intended for informational purposes only and should not be considered legal or financial advice.