Consent to let

What’s consent to let?

It’s permission you get from your mortgage lender to let out your home to tenants after you move out, even though you have a residential mortgage.

Usually you’d need to switch to a buy-to-let mortgage to be allowed to let out a property, but that might not be practical if you’re in the middle of a fixed term mortgage deal where there would be steep early repayment charges to pay.

Is it illegal to let a property without a buy to let mortgage?

If you have a residential mortgage, it’s against the terms of your loan to rent it out without the lender’s permission. That amounts to mortgage fraud.

The consequences can be serious. If your lender finds out it could demand that you repay the mortgage immediately or it’ll repossess the property.

Your lender only needs to check past letting ads or the electoral register to uncover the fraud.

But if you do want to let out your home, instead of switching  to a buy-to-let mortgage you could instead apply for consent to let, which gives you permission to take in tenants on your residential mortgage.

When might you need consent to let?

There are a few situations where consent to let might be a good option for you:

Going away 

You might be working somewhere else for a while, or spending time overseas. Consent to let would allow you to rent out your home to a tenant while you’re away, so the income could help cover the mortgage. That’ll mean you’ve got more funds available to rent elsewhere.

Moving in with a partner

If you want to move in with a partner but you’re not ready to give up your sole-owned property yet, you could get consent to let to move a tenant in and cover the mortgage while the two of you make a decision about where to live longer term.

Middle of a mortgage deal

If you’re in the middle of a fixed-term mortgage deal, there might be early repayment charges to pay if you want to sell up and move back in to rented accommodation. But if you get consent to let you can get a tenant in until you come to the end of your fixed term and then either sell up, or switch to a buy to let deal.

Consent to let agreements are usually only valid for a limited time – for example, the time you have remaining in a fixed-rate mortgage deal, or for 12 months at a time.

This means they’re not a long-term solution for prospective landlords, but can be a handy stop-gap while you move house, make longer term decisions and choose to either sell, move back in or remortgage to a buy to let mortgage.

How much does consent to let cost?

It’s usually not free to get consent to let. Lenders will usually either charge an extra percentage rate on top of your normal mortgage interest rate or there’ll be a fee to gain consent. Some lenders will charge both.

The cost of consent to let varies from lender to lender, so you may need to call your lender to ask if they allow consent to let and what they charge.

You’ll also have to meet your obligations as a landlord, which can be costly at the outset, especially as you won’t have any rent coming in yet.

You should allow a few thousand pounds for preparing your property for a tenant to cover:

• Repairs
• Electrical safety certificate
• Gas safety certificate
• Letting agent fees
• Advertising costs
• Tenant checks
• Landlord insurance

Restrictions and criteria

It’s not just extra costs that deter investors from using consent to let so they can sidestep buy-to-let mortgage rates – lenders could include any or all of the following restrictions on gaining permission.

Time with lender

You may have to have held your current mortgage deal for a certain length of time e.g. 12 months.

It’s likely there’ll be a time limit on how long your consent to let is valid for before it’s reviewed e.g. 12 months.

Equity

You might need to have a certain level of equity in your home e.g. 25%.

The rental income will need to comfortably cover the mortgage e.g. 125% on an interest-only basis.

Income

You might need a certain minimum income to get consent to let.

Help to Buy and shared ownership

Help to Buy and shared ownership mortgages frequently contain clauses forbidding letting out your property as it may be viewed as subletting.

If you have this type of mortgage, you’ll probably have to find a way to convert to a standard mortgage (repaying any shared equity or government loan in the process) before considering getting consent to let.

Advantages of consent to let

There are a few reasons to consider consent to let:

• Can allow you to move house more quickly
• Won’t have to cover the cost of mortgage and rent, simultaneously
• Should cover the costs of your mortgage as the lender will ask for evidence to check this when you apply
• A straightforward way to dip your toe into buy-to-let and decide if being a landlord is right for you long-term

Disadvantages of consent to let

Consent to let isn’t free from risks and costs. Consider the drawbacks too:

• If you can’t find tenants for your home for whatever reason, you’ll be in the stressful situation of meeting the mortgage payments as well as rent or mortgage on the home you move to
• You’ll have to pay mortgage fees and/or a higher interest rate
• There are other costs to being a landlord, even for a short time. You might need to engage a letting agent to market and manage your property and you’ll have to make sure decor and furnishings are safe and attractive for tenants.
• You’ll also have to meet any other landlord obligations like fitting smoke alarms and getting a gas safety certificate for the boiler
• You’ll have to arrange and pay for repairs and maintenance during the tenancy

What happens when your consent to let ends?

As consent to let is usually only granted for a limited length of time, you’ll have to think about what to do when it ends.

Your lender may grant you an extension if you’re still within a mortgage deal term, or it may offer to switch you to a buy-to-let mortgage.

If you decide to commit to being a landlord and do this, don’t just take your existing lender’s offer without shopping around first and talking to a mortgage adviser.

Can I rent my property out to family?

A lot of buy-to-let mortgages will have terms and conditions that prevent you from renting out the property to immediate family such as adult children. But consent to let terms are less likely to specify you can’t do this.

But that doesn’t necessarily mean your lender will be happy with this arrangement. You’ll still have to meet all the other consent to let terms, like having a legal tenancy agreement drawn up and charging a market value for rent.

If you’d hoped you’d be able to have your family member as a tenant and charge a lower rate of rent, this might mean you can’t get consent to let, but you could try to find a family buy-to-let mortgage.

Family buy-to-let mortgages are quite hard to come by, but they typically ask that the rental income covers just 100% of the mortgage cost, with nothing more on top.