Consent to Let – Should I tell my residential lender I am now letting the property?

“Should I obtain consent to let” has been a very common question over the years asked by both accidental landlords and portfolio landlords who are moving, but wish to keep their property as an investment.

The very easy answer is yes you are contractually obliged to tell your lender and I would not give any advice other than to do so.

However, I understand that some people find themselves in the position where they have already let the property and fear lenders declining the request with no ability to remortgage due to a high loan to value, or being unable to afford an increase in interest rate. Other borrowers also do not realise they have a responsibility to tell the lender, or don’t think they will ever find out.

From conversations I know that many people have “got away with it” for some time, but that does not mean they could be unlucky and the lender finds out tomorrow!

It has been reported in the press recently that mortgage lenders are launching a new crackdown and in an effort to catch borrowers are trawling the electoral register, social media websites and online letting portals such as Rightmove for evidence that a property has been put up for rent.

Having worked in the banking industry myself I know many lenders have quite large fraud departments often headed up by ex-police officers that would probably be used for this type of exercise. This risks of getting caught are not just the issues that may be caused with the property in question, but also being black listed with all lenders using their shared Hunter system.

Some lenders are more helpful than others though, allowing borrowers to let with a “consent to let” form allowing a 1- 2 year period of grace with no increase in interest rate under the understanding that the loan will be repaid or remortgaged to a Buy to Let within this period. However some lenders will charge and increase in interest rate by as much as 1.5% in the case of the Nationwide.

The Chelsea Building Society actually impose a 1% penalty if a borrower has not told them on top of the standard 1% interest rate increase.

I do not want to panic anyone in this situation, but it is important to understand the implications and risks involved.

We already have a very well read and commented on article concerning this called “Letting my house out without telling the lender“, so for continuity I would be most grateful if you could post any comments on that thread please CLICK HERE to comment

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