Consent to Let for Mortgage Holders

Whether you have accepted an unexpected job opportunity or decided to move in with a partner, the need to relocate can arise very quickly. In these situations, many homeowners understandably want to keep their property, but covering both mortgage payments and rent at the same time can be difficult.

The good news is that most lenders will allow you to let out your home on a temporary basis through a consent to let agreement. Below, we explain what this important permission involves, how to arrange it, and what you should consider if you have become an accidental landlord.

What is consent to let and how does it work?

Consent to let is a formal arrangement between you and your mortgage lender that gives you permission to rent out your home while keeping your existing residential mortgage in place, usually for a limited period.

If you rent out the property without getting this permission first, you would be breaching the terms of your mortgage. In that situation, the lender could ask for the mortgage to be repaid in full, and it may also affect your ability to obtain a mortgage in future.

Although some lenders are cautious about granting consent to let, as tenants may be viewed as carrying more risk than owner-occupiers, it is commonly approved on a temporary basis only. This is usually on the understanding that you will either move back into the property or sell it once the agreed period ends. In many cases, a term of one to two years gives homeowners enough time to decide whether becoming a long-term landlord is the right option.

What type of mortgage do you need for it?

The main purpose of consent to let is to allow you to keep your existing residential mortgage. In most cases, you would normally need a buy-to-let mortgage to rent out a property, but where there is a valid reason for consent to let, it can help you avoid the inconvenience and extra cost of switching to a buy-to-let mortgage straight away.

You may need consent to let in situations such as:

• Travelling or studying away from home for a set period

• Working temporarily in another part of the country

• Planning to move in with a partner but not yet wanting to sell your current home

• Inheriting another property while wanting to keep your original one

• Waiting for a buy-to-let mortgage to complete but wanting to let the property sooner

• Being in the early part of a fixed-term mortgage and planning to let the property later, where using consent to let until you can remortgage to a buy-to-let deal without early repayment charges could save a significant amount

When to switch to buy-to-let

Consent to let agreements are generally designed as a temporary solution, so you will usually need to show that you plan to return to the property or sell it within a relatively short period. In most cases, consent to let is granted for up to two years, although some lenders may allow an extension. This often involves an annual charge.

If your lender decides that letting out the property has become a longer-term arrangement, they are likely to require you to remortgage onto a buy-to-let mortgage instead. Buy-to-let mortgages are intended specifically for landlords renting out property for income, so they are more commercial in nature and are often more expensive than standard residential mortgages.

Steps to obtain consent to let

Although most lenders offer consent to let, it is worth thinking about your longer-term plans before making an application. Speaking to a mortgage broker who understands this area can be useful, as they may be able to provide consent to let guidance and recommend suitable lenders for accidental landlords.

If you want a smoother route to securing consent to let, the usual steps are:

• Speak to a mortgage broker for advice

• Review your lender’s consent to let terms and conditions

• Gather the evidence needed to support your request, such as travel documents, a job offer, deployment papers, or proof that you are moving to another address

• Apply online or complete your lender’s consent to let form, as some lenders provide their own application process while others may require you to request it directly

• Once consent to let has been approved, you can begin looking for a tenant

Which lenders allow consent to let?

Most lenders are reasonably flexible when it comes to granting consent to let, as they recognise that personal circumstances can change at short notice. However, many will charge either an application fee, an annual fee, or both. Some may also apply a specific consent to let interest rate, which could mean a temporary increase to your current rate for the duration of the agreement.

Each lender sets its own criteria for consent to let, but the requirements will often include the following:

• You have lived in the property for at least 6 to 12 months

• You are up to date with your mortgage payments and not in arrears

• You have a tenancy agreement in place

• You have obtained approval from your home insurance provider

• The letting period will usually be limited to a maximum of around 24 months

Alongside these points, some lenders may impose further conditions based on the number or type of tenants you intend to let the property to. You may also be required to hold a minimum level of equity in the property.

The table below outlines the fees that may apply for a consent to let agreement, together with any interest rate increases and the main policies used by some of the leading UK mortgage lenders.

Thing to consider before you request consent

While consent to let can be very useful if you need to move away temporarily but want to keep your home, it is important to understand the wider impact of becoming an accidental landlord. Key points to think about include:

• Insurance: You will usually need to switch from standard home insurance to landlord insurance, but this is unlikely to be approved unless you have consent to let in place.

• Higher interest: Consent to let rates can be slightly above a standard residential mortgage rate. Some lenders apply an increase of 0.5% to 1%, often referred to as interest loading. Even so, this is often still lower than typical buy-to-let rates.

• Legal requirements: As a landlord, you take on extra responsibilities to keep the property to the required standard. This may include obtaining the appropriate safety certificates and meeting minimum rental standards. The Renters' Rights Act also requires landlords to register both themselves and their property on a central government database to avoid significant fines. In England, landlords must also carry out Right to Rent checks to confirm a tenant’s immigration status.

• Letting costs: Depending on how practical it is to manage the property from your new location, you may need to appoint a letting agent, which will add to your costs.

• Tax implications: Landlords can no longer deduct mortgage interest from rental income before tax is calculated and instead receive a 20% tax credit. This can push some accidental landlords into a higher tax band. If you sell the property in future, you may also have to pay capital gains tax for the period when it was let out.

Frequently Asked Questions