Consent to Let: rent out your home on a residential mortgage

With the most popular type of mortgage in the UK, which is a residential mortgage, one of the mortgage conditions is that you need your lender’s written permission before you let the property. Letting without that permission breaches your mortgage conditions. However, if you bought your home to live in and now want to earn money from it, this is possible without having to remortgage. In this article, we explain an alternative solution: consent to let.

Why do you need your lender’s permission to let your home?

A residential mortgage is agreed on the basis that you will live in the property yourself. Letting it out changes that basis, which is why your mortgage conditions require your lender’s written permission before you let the property. If you want to let your home long term, look at a buy-to-let mortgage instead.

What is consent to let?

In some cases, your lender may give official permission to let the property. This permission is called consent to let, and it allows you to let the property to a tenant without breaching the terms of your mortgage. The key aspect of consent to let is that it is given usually for a limited period – for example, up to 12 months at Virgin Money (you can apply for an extension) and up to 27 months at HSBC. This means that consent to let is not suitable if you want to move out and turn the property into a permanent rental. Lenders grant consent to let for temporary letting only, so if you intend to move out permanently, a buy-to-let mortgage is usually the route rather than consent to let.

Consent to let is meant for letting your home for a limited time, not as a permanent rental. Be open with your lender about your plans when you apply.

In what cases is it worth applying for consent to let for a mortgage in the UK?

Here are some situations in which consent to let may be an option:

• Temporary relocation – a common reason for asking for consent to let. Changing jobs, moving abroad for a while or moving in with a new partner are typical examples.

• Moving to a new home before selling the current one – if you have already bought a new property and need to postpone selling your old home, letting it for a few months can be a good solution. If you do not want to sell your old home and would rather let it permanently, the solution is to remortgage to a buy-to-let mortgage.

• Separation of co-borrowers – in a difficult situation such as divorce, it can be hard to decide quickly what to do with the property. To gain time without living together, you could let the property for a while.

• Financial difficulties – unpaid mortgage instalments can pose a real threat to your mortgage agreement. If you are struggling with repayments, speak to your lender early – letting with consent may help in some cases, but some lenders will not consider consent if you are already behind with payments.

• Emigration with an uncertain return plan – your lender may give you permission to let your property if you are moving but are not sure whether you will return. This gives you time to make a calm decision.

Will the lender raise my interest rate if I use consent to let?

Many people worry that if they apply for consent to let, their lender will increase the interest rate on their mortgage or charge an additional fee. Unfortunately, this is possible, although not in every case.

With consent to let, the cost depends on your lender’s policy and your mortgage product – some lenders charge a fee, some add to your interest rate, and in some cases there is no extra charge. Fees vary by lender – for example, NatWest charges a one-off £120 fee plus £120 a year, Virgin Money charges £125 for each consent granted and Santander charges £295 for each period of consent. Some lenders add to your interest rate instead – for example, Nationwide adds 0.5% to fixed and tracker rates while the property is let.

How do you apply for consent to let?

To apply for consent to let, first contact your lender – each lender has its own procedure. You will most likely receive a form to fill in with your details and the reason for your request.

To improve your chances of getting consent, it is worth finding out your lender’s policy on consent to let. You can find this information on your lender’s website and in your mortgage offer and its terms and conditions. You can also contact your lender directly and ask about its policy.

Most lenders ask you to complete their own form or online request and to explain why you want to let. For example, you might explain:

‘I am starting a trial period at a job in another city. I am unable to commute daily from my current place of residence, so I need to move temporarily. I need permission to rent for a period of X months, during which time I will decide whether to stay in the new place permanently or return to my current location.’

In addition, remember that lenders usually require you to have held your mortgage for at least six months before they will consider consent to let.

Summary

If, for some reason, your property is going to stay empty for a while, it is worth considering applying for consent to let and letting it out for that period – this will allow you to earn rental income from it, although your lender may charge a fee or add to your interest rate, and you will take on a landlord’s costs and responsibilities. Remember that letting a property with a residential mortgage without your lender’s consent breaches the mortgage conditions and can have serious consequences. Consent to let does not apply if you plan to let your property permanently – it is granted for a specific period, so if you want to keep letting it long term, consider remortgaging to a buy-to-let mortgage instead.