Consent to Let – Everything You Need to Know

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Consent to Let – Everything You Need to Know
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Getting consent to let for your property can seem complex and daunting.

But without it, you could be breaching your mortgage terms.

In this guide, we’ll provide an overview of everything you need to know about consent to let before letting your property.

In the UK, consent to let refers to the permission a homeowner gains from their mortgage lender to let (/rent) out their property to tenants.

It is required because most mortgages are granted based on the condition that the homeowner lives in the property. 

In other words, consent to let prevents the homeowner from being in breach of their mortgage terms.

Not all mortgage agreements require you to obtain consent from your lender before renting out your property. 

However, the vast majority do. After all, standard residential mortgages are usually only intended to finance a property you occupy.

Most buy-to-let and holiday-let mortgages don’t require consent to let, as they are explicitly designed for rented properties. 

However, consent is nearly always needed if you have a residential owner-occupier mortgage.

To double-check if you need consent or not, thoroughly check the terms of your mortgage contract. 

It should explicitly state the requirement to obtain permission if it’s needed. 

If you can’t find or understand this information, contact your mortgage lender directly to query it.

There are a few key reasons why residential mortgage lenders usually require you to get consent to let.

1. Increased risk

Renting involves some additional risks compared to an owner-occupied property. 

Tenants may damage the property or fall into rent arrears. 

Your mortgage lender has a financial stake in the property, so they want to assess and approve these increased risks.

2. Affordability

Mortgage lenders calculate how much you can borrow based on your expected living costs and outgoings as an owner-occupier.

Letting your home can significantly change your expenditure, impacting your ability to repay your mortgage.

3. Insurance

Standard building insurance often doesn’t cover rental properties. Lenders sometimes require specialist landlord insurance.

Your lender will want to check that the appropriate cover is in place.

4. Compliance

Various laws and regulations cover renting property, including safety, deposits, and more.

Before letting, your lender will want to check that you understand your obligations as a landlord.

Yes, it is possible for consent to let to be refused by your mortgage provider. 

Every lender will have specific criteria used to make decisions about consent requests.

Typical reasons why a lender might refuse consent include:

1. Poor affordability

They are letting a property can change your income and expenditure. 

If updated affordability checks suggest the mortgage payment is no longer affordable for you, the lender may deny consent.

2. Insufficient rental demand

Your lender may assess if there’s suitable local demand to sustain ongoing rental payments. 

Areas with known oversupply issues are more likely to be refused.

3. Property suitability

Some property types, such as high-rise flats, may be deemed suitable for the rental market.

4. Loan to value (LTV) percentage

loan to value (LTV) percentage is a financial term used in property to describe the ratio of a loan to the value or purchase price of a property.  

Lenders use it to assess the risks associated with individual mortgages. Applications are more likely to be declined if you have less than 20-25% equity. 

Most lenders prefer rental properties to have lower LTV percentages.

5. Mortgage product restrictions

Particular mortgage deals may have specific clauses prohibiting letting. 

For example, lenders often forbid letting new-build properties financed under Help to Buy schemes for a set period. Or they limit the number of buy-to-let mortgages a borrower can have

Before applying for consent, always thoroughly check if restrictions apply to your mortgage product. 

While refusals are possible, most consent requests that meet all eligibility criteria are approved.

Getting consent to let is usually straightforward for standard residential mortgages with no letting restrictions. 

The process requires filling out a consent request application form and providing any documentation requested by your lender.

Typical conditions that need to be met

If letting is allowed under your product terms and property checks suggest letting is viable in your area, consent should be simple and manageable.

However, the effects of the 2008 financial crisis are still being felt today. 

Banks and building societies are typically still cautious about high LTV consent applications.

It’s also fair to say that consent requirements have contributed to a decline in residential homeowners’ flexibility in letting their property. 

Yet, for most homeowners with standard mortgages and sufficient equity, gaining consent remains relatively achievable. 

To avoid delays or refusal risks, satisfy all affordability, property, and documentation stipulations.

Approval times for consent to let applications vary between lenders. 

Some lenders may only take a few days to consent, while others can process requests for 4-6 weeks.

The cost varies between mortgage lenders. Some charge admin fees to process consent requests.This is usually in the form of a one-off fee.

In a minority of instances, gaining consent may also incur early repayment charges on your mortgage – so always double-check this first.

On top of admin fees, you’ll usually need to switch your mortgage deal if you let your home under consent. 

This often means moving from your existing residential deal to a higher-rate buy-to-let product instead. 

Lenders can insist that you change products like this to comply with tighter buy-to-let regulations when letting a property.

Higher ongoing costs are the main financial downside of needing consent from most lenders. 

Yet, for many borrowers, the increase in mortgage payments is offset by achievable rental incomes on the property.

If you require consent to let from your provider, keep the following tips in mind to help make the process as smooth as possible:

Check eligibility upfront 

Thoroughly read your mortgage offer documents first and identify any restrictions around letting. 

Also, clarify that your property type, loan amount and LTV ratio meet any threshold lending criteria.

Gather evidence

Have tenant referencing procedures, safety certification, landlord insurance and detailed financials ready to share. 

These prove that you understand your responsibilities and that adequate protections are in place.

Get agent support

When applying, seek assistance from a letting agent. 

They can advise on current local rental demand and projected yields and prepare professional tenancy agreements. These provide extra assurance and credibility to lenders.

Allow ample time

While some lenders may only take a couple of weeks, a consent application can take over a month in some cases.

Account for processing times so tenancies can start on schedule.

Be ready to switch deals

Expect to change your mortgage product to a buy-to-let alternative when seeking consent. 

Factor in any extra lending costs so they don’t come as a surprise.

For standard residential mortgages, you typically need consent from your existing lender before renting your property. 

While an extra step, gaining consent is manageable for most borrowers who meet critical lending criteria.

With prudent planning and preparation, consent to let remains attainable from high street banks and building societies today. 

So don’t let the need for permission delay your plans if circumstances require renting out your property for a period.

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