Holly Bennett
If you have a residential mortgage but are looking to rent out your home while you’re living elsewhere for a short time, you’ll need to clear it with your lender and get permission in writing.
You may be able to apply for consent to let, which takes account of the short-term arrangement without needing to remortgage or convert to a buy-to-let mortgage.
Here’s how getting permission to let works and the steps you’ll need to take.
What is consent to let?
Consent to let is an agreement with your mortgage lender that you can rent out your home for a limited amount of time.
Residential mortgages aren’t designed for homes with tenants, so you’ll need your lender’s permission if you want to rent yours out for a short period.
Consent to let won’t convert your mortgage to a buy-to-let mortgage, and you won’t be remortgaging. It’s a temporary arrangement with your lender to give you some flexibility.
Getting consent to let isn’t guaranteed, and not all lenders offer it. But if you meet your lender’s conditions, it might be a useful option.
Why might you need consent to let?
There are a few reasons why you might want to get tenants for a short period, including:
- working away
- going on a long trip
- waiting for a property sale
- waiting for a buy-to-let mortgage to go through
- going on Armed Forces deployment
If you plan to rent out just part of your home, such as an annexe or a single room, you may still need permission from your mortgage lender. The same can apply if you’re taking in a lodger and sharing your home. Conditions vary, so check your mortgage agreement and if in doubt, ask your provider to confirm the terms.
What happens if you rent out without consent to let?
It’s usually a condition of a residential mortgage that you must tell your lender before you rent out your property. If you go ahead without your lender’s permission or after your consent to let has been refused, you could be in breach of your mortgage terms and committing mortgage fraud.
This is because your mortgage agreement and the rate you are charged are based on it being your home, where you are the owner-occupier. Letting out a property comes with added risks that your original residential agreement didn’t take into account.
Your lender’s response to you letting out without their permission might be to raise your interest rate, charge you backdated fees, or even ask you to repay your mortgage or face repossession if this isn’t possible. This will also affect your credit history and potentially make remortgaging harder.
Who is eligible for consent to let?
Your mortgage lender will have its own criteria, but you will usually need to:
- Have had your mortgage for a minimum period, such as six months.
- Be up to date with your mortgage payments and not in arrears, and have paid on time in recent months.
- Only rent out your home under one tenancy agreement, with a maximum number of people on that agreement.
- Have an acceptable tenancy agreement, such as an assured shorthold tenancy (England and Wales), a private residential tenancy (Scotland), or an uncontrolled tenancy (Northern Ireland).
- Have a minimum annual income.
- Hold a minimum amount of equity in your home, or minimum or maximum loan-to-value ratio.
- Charge enough rent to at least cover a set percentage of the mortgage interest.
When is consent to let unlikely to be given?
The type of mortgage you have may prevent you from getting consent to let.
If you have a Help to Buy or other equity loan mortgage, you won’t be able to rent out your home unless in exceptional circumstances.
Subletting isn’t generally allowed with a shared ownership mortgage, but some lenders will consider it if you have permission to sublet from the housing association or local authority you have shared ownership with.
If you have a guarantor mortgage, where a named guarantor agrees to step in if you can’t make your mortgage repayments, lenders may not offer you consent to let.
Who you rent to also affects a lender’s decision. As well as no multiple tenancies and a maximum number of tenants, some lenders won’t offer consent to let if you are renting to a member of your family, or may offer stricter terms.
How to get consent to let
Applying for consent to let is usually a straightforward process. You’ll need to fill in a consent to let or permission to let application form downloaded from your lender’s website, or apply through your online mortgage account. Otherwise, you can usually ask for a form over the phone or by post. You should look to apply at least a month before the proposed letting start date.
You’ll be asked for a few details, including why you’re looking to rent it out temporarily and the type of tenant agreement you will have in place. You may also need to supply proof for your temporary move, such as a relocation contract, and explain how long you want consent to let for.
You may get a decision within a couple of weeks. This will include terms and conditions for letting out your property that you will need to sign. Bear in mind that if your lender offers you consent to let but you change your mind before you sign, you may still have to pay the fee.
How much does consent to let cost?
If your consent to let application is accepted, the provider will usually charge a fee. This can range between around £150 and £300, but there is no standard, so check first. The fee may be a set amount or an increase in your mortgage interest rate that will be reflected in your monthly payments – or both. Some lenders may charge a fee annually for as long as the consent to let is in place.
This fee will be chargeable each time you ask for consent to let, even if it’s for the same mortgage and property.
If you’re in the Armed Forces and are going on deployment, the fee will usually be waived.
There are other related costs that come with being a landlord that you’ll need to factor in too, even though it’s a temporary arrangement. These include letting agent fees, or if you’re going it alone, credit checks and paperwork, along with any advertising costs.
Also be aware that you may be liable for tax on rental income. You can however claim back 20% as tax relief on your mortgage interest, while your property is being rented out.
What are the pros of consent to let?
There are some obvious benefits of getting consent to let to rent your home for a short period:
- You can cover the mortgage with your tenant’s rent while you relocate for a while.
- You can trial being a landlord before committing to a longer-term arrangement.
- You don’t need to remortgage or convert your mortgage to a buy to let. This can save time and money, such as an early repayment charge for remortgaging ahead of time.
- It can buy you time until you make a more concrete decision about your living arrangements or property plans.
What are the cons of consent to let?
Some of the drawbacks of consent to let are:
- If you can’t find or keep a tenant, you will still need to cover the mortgage repayments. This could be on top of any accommodation costs you’re paying in your temporary home.
- You remain responsible for ongoing maintenance and any necessary repairs to your property.
- You will need to pay a fee, which will either be a flat fee or added interest on your mortgage payments, or sometimes both. This can be a one off payment or a yearly charge.
- Even though you’re only temporarily letting your home, you will have extra responsibilities as a landlord.
More generally, you’ll need to be comfortable with someone else using your home for a while and getting it up to rental standards. You may want to remove items from your home you would rather not share (or that your temporary tenant might not want).
What other landlord responsibilities are there?
Consent to let is only one aspect of your duties as a landlord. Among other things, you will need to arrange:
- an annual gas safety certificate, if you have a gas supply
- an Energy Performance Certificate with a rating of E or higher
- installation of smoke alarms and carbon monoxide testers
- checks of electrical installations and appliances
You will also need to tell your home insurance provider that you will have temporary tenants, as you may need to adjust your buildings and contents cover.
You will probably also need to make some necessary home improvements to get your home rental-ready.
You can check your responsibilities as a landlord in England and Wales on the government website. There are separate guidelines for Scotland and Northern Ireland.
How long does consent to let last?
Consent to let in most cases is for a limited period only. It usually lasts for between 12 and 24 months, but this is down to your provider and how long you need it for. You may find in some cases it can last for the lifetime of the mortgage, subject to paying a yearly fee.
If you have a fixed-term mortgage, the date that your deal is due to end will also come into it.
What happens when consent to let ends?
Once the allotted time is up, if you don’t do anything, you will revert to the original residential mortgage agreement. If you want to let your home out for another block of time, contact your lender ahead of time. You may be able to extend your consent to let period.
Otherwise, if you’re looking to rent out longer term, you may need to ask to remortgage your home to a buy-to-let mortgage. If this is the route you’re taking, you don’t have to stick with your current lender. It’s worth shopping around for competitive rates for the mortgage you need. If your lender won’t offer you the switch, other lenders might.
Changing your mortgage type is a big decision. There are lots of factors to consider and costs to bear in mind. For example, a buy-to-let mortgage can cost you more in fees and interest, and you may need to have a larger deposit to be accepted than for a residential mortgage. You may also have to pay an early repayment charge to exit your current residential mortgage arrangement.
If you’re in any doubt about the best next steps, a mortgage adviser can help.
Image source: Getty Images
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