Have You Got Permission To Let?

Wednesday, December 31, 2014

Many UK Landlords still operating without permission to let from mortgage lenders

Landlords need permission to let from their mortgage lenders before allowing the property to be rented out

Some UK Landlords still operating without
permission to let from mortgage lenders

There has been an upsurge in the number of UK private rental sector landlords taking advantage of the continuing strong tenant demand. However, there are still some landlords, without buy to let mortgages, who are failing to ensure they have obtained the right permission to let from their residential mortgage lenders, resulting in dire consequences for unfortunate tenants forced to make insurance claims.

Landlords with standard residential mortgages must obtain consent or permission to let from their mortgage lenders before allowing tenants to live in the property,  but many often switch to buy to let mortgages to ensure that they can maximise their rental yields, without needing to resort to subterfuge.The increase in the number of private rental sector landlords also includes a proportion of reluctant and accidental landlords, who are only renting out properties that would otherwise be financial burdens for them, as they are unable to sell, due to the property being in negative equity.

Unfortunately, reluctant and accidental landlords are often scared that their mortgage companies would decline or withdraw their mortgage finance, that many new landlords have been renting out their properties without informing their mortgage lenders, remaining under-educated about correctly operating a rental property business or their legal obligations to their tenants, mortgage lenders and insurance providers.

For insurance purposes, unless the property is owned outright or purchased with a buy to let mortgage, the owners must have the correct permission to let from their mortgage providers to allow tenants to rent the property.

Without permission to let from mortgage lenders, it is possible that landlords who have taken out what they think is adequate landlords building insurance and landlord contents insurance cover, may find that their policies are in fact null and void.

If tenants have their personal belongings stolen or damaged, they could find that their claims are declared void due to the property owners not having permission to let, leaving the landlords and their tenants in a difficult position.

Landlords Buildings insurance covers a multitude of eventualities including loss of rent following damage from an insured peril like fire or flood damage, £5 Million (GBP) of property owner’s liability should there be an injury or death to individuals on or near the property, (for example tenant’s visitors, guests, meter readers, postman or indeed anyone else) and accidental and malicious damage cover, but only if the property owners have permission to let the property.

This was written by Mike Clarke. Posted on at 11:30 am. Filed under Buy To Let. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.