I think are required to let your mortagage company know but there is a certain amount of time they will let you let without a buy to let mortgage. I think this varies from company to company and circumstance can also play a part. I was given 5 years until I had to change because I was in the military.
Basically if you have any problems ie the house burns down, your normal buildings insurance won't cover it and when you change the buildings insurance to buy to let they will want to see proof that you have informed the mortgage company that it is buy to let.
If she's just letting out her house she would be fine, not even charged more for a certain amount of time, a couple of years i think, if she's bought a house with the sole intention of letting it then she's taking a big risk.
Well we have let ours out for 10 years now, (DH is also in the military). We are with lloyds TSB, they have known from the start about the renting out and we have never been told to change to a buy to let mortgage!
We let ours out for 4 years but it was our only mortgage and had previously been our principal residence. Did tell lender but they didn't change anything. Think in theory you can have more than one mortgage (think of 2nd homes) so this not necessarily an issue but some lenders will insist it is changed to a buy-to-let one, with a higher rent of interest, if the property is being rented out. More of potential problem insurance and tax wise if she isn't declaring it as a let I'd have thought.
The insurance thing is the big issue really - you dont want not to be covered if something happens. You need special landlords insurance. I once looked into it, and they didnt say anything about needing proof that the mortgage co knew about it - but then I never bought the insurance in the end.
You have to send a letter from your mortgage company to show they are aware of the letting when you claim, it's in the small print of the insurance.
Our tenannts trashed the house, burn the carpets, damaged the cellar. Could have been worse.