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Original poster

AIBU to wonder if lots of people rent out their properties without a buy-to-let?

51 replies

Wildswimming2022 · 29/03/2023 13:10

I know quite a few couples who have bought a new property but are keeping their old one/s to rent out. When I looked into it, as had considered doing similar, the numbers did not stack up at all. The the profit would have been so minimal that it was not worth the risk. A big part of this was the conditions that came with a buy-to-let mortgage and bigger deposit required. Does anyone know if a lot of people are actually renting out while on their residential mortgages rather than switching to buy to let? Online it says this is very risky, but I wonder if a lot of people are doing it anyway...

OP posts:
Dacadactyl · 29/03/2023 13:41

They could just have got a "consent to let" from their lender and stayed on their old mortgage rate.

We did this in the past, the bank gave us consent to let.

KnightonShiningArmour · 29/03/2023 13:43

People bank on capital appreciation rather than profiting each month.

I’m not a landlord.

emituofo · 29/03/2023 13:56

We bought out 1st house in another country to live but had to move to the uk due to job change after a year. When we left we couldnt decide if to sell or not because we didnt know if we would want to stay in the uk.

We rented it out over there while renting a house here. Now we are looking at buying a house in the uk while keeping the house abroad.

Our house was on morgage and the rent roughly covers the morgage. The biggest difficulty for us is to save up a big deposit while renting here because we dont qualify as first time buyers. This means bigger deposit ( was told at least 15%) and higher stamp duty.

So yes, if you already have a big morgage for the first house and rent doesnt quite cover it, it will be hard to get a 2nd morgage. However in our case the 1st house has been rented for a few years and we can prove we have regular rent that covers the morgage. We are also lucky enough to have saved quite a big deposit for the 2nd house.

EyesOnThePies · 29/03/2023 13:56

They might have Let to Buy mortgages
They might have borrowed in such a way as to have paid off the first mortgage
They might not be bothered about monthly profit but be looking to make money from increase in value, or just keep a hold of a property each for sense of security
Etc.

astarsheis · 29/03/2023 13:57

We did the same and had a consent to let change to our mortgage.

Ilovetocrochet · 29/03/2023 14:09

My son kept the house he bought when he moved in with his girlfriend. At the moment, he has kept the original low interest mortgage ( obviously with their consent) and the rental easily covers the mortgage and has allowed him to save towards repairs etc.

Next year, the term runs out and he will need to remortgage on a buy to let basis costing quite a lot more. At that point, the rent will only just cover the mortgage and other costs but I think my son plans to keep the house as he’s owned it since 2019 so has built up some equity.

headingtosun · 29/03/2023 15:21

We also used consent to let in past.

hollypolly12 · 30/03/2023 22:24

Friends mum is a mortgage advisor and she told her son to tell them he was moving away for work to avoid the buy to let mortgage... it worked

FearTheWankingDead · 30/03/2023 22:38

Wouldn’t you have to pay all the second home costs?

PotteringAlonggotkickedoutandhadtoreregister · 30/03/2023 22:39

I have a residential mortgage and consent to let from my lender

LoveBluey · 30/03/2023 22:57

Yes you can legitimately get a consent to let agreement from your mortgage provider and then pay tax etc in the usual way.

Mixkle · 30/03/2023 23:08

Oh yeah people have always done that, my parents rented places out without telling their mortgage company for about 20 years. They could never have afforded it otherwise.

determinedtomakethiswork · 30/03/2023 23:13

What would happen if the mortgage provider discovered that you were renting out the price without permission?

determinedtomakethiswork · 30/03/2023 23:15

Does anyone know what kind of mortgage you'd get if you wanted to buy a house, first time buyer, for someone in your family to let? It's not in the same area as your own job and you normally rent a place yourself. The place you live in isn't a place you could afford to buy a house but you want to get on the housing ladder.

BuffetBreakfastCoffee3 · 31/03/2023 04:30

Officially to buy another property to rent out

Pay extra stamp duty
Pay extra deposit
Pay mortgage, solicitor survey etc
Pay council tax & all bills if the property is empty for any length of time. Some councils charge double council tax
Pay to make property ready to rent out
Pay gas & electrical safety checks
Pay landlord insurance which is more expensive
Pay tax on the income if over the 12k limit via self assessment
Pay property agency if they manage the property or you manage the property yourself
Pay for ongoing repairs & maintenance of the property
Pay communal fees if leasehold property
Pay capital gains tax upon sale

Some people don't follow the rules, but the tax man can still request back dated tax after 25 years !

Buyer beware !

Crunch the numbers

chanceofpear · 31/03/2023 11:28

Consent to let. Very common.

Shamoo · 31/03/2023 11:37

I would imagine that loads are doing it with consent to let or on their old mortgage, and also not paying tax on it.

boxtrot · 31/03/2023 11:50

I rented out my house through an agency and they required the consent to let letter from my mortgage company. I imagine that's fairly standard now. Obvs won't apply to private lettings. I was super cautious because your insurance is void if you're letting out a house without informing the insurance company.

chanceofpear · 31/03/2023 12:39

Shamoo · 31/03/2023 11:37

I would imagine that loads are doing it with consent to let or on their old mortgage, and also not paying tax on it.

Why would you think not paying tax. Weird.

Lots of old mortgage fraud but the people that bought when that was rife will have loads of equity now so will have been able to transfer to a normal product.

vivainsomnia · 31/03/2023 14:06

A few posters mentioned that the rental paid for the mortgage and repair costs. What about tax owed?

I can't but wonder how many just don't declare the income and staying on a residential mortgage makes it more easily to avoid being caught.

Let to buy is usually only granted for a few years, so inevitably, at some point, landlord would have to move to ltb sooner rather than later.

Risky also in terms of insurance.

PuttingDownRoots · 31/03/2023 14:08

Lots gave Interest Only mortgages.

fiorentina · 31/03/2023 14:12

I’ve had consent to let on a property before but that was restricted to two years of rental and certain restrictions applied.

Shamoo · 31/03/2023 15:08

@chanceofpear because I know a number of “accidental” landlords and at least half don’t declare it or pay tax!

almostwarm · 31/03/2023 15:20

Risky also in terms of insurance.

It is perfectly possible to get landlord's insurance with consent to let.
The insurance is pretty cheap.

Although completing the tax forms are a pain and the tax isn't as advantageous as it once was it still isn't a bad deal overall.

Original poster
Wildswimming2022 · 31/03/2023 19:53

Surprised by the number of people saying consent to let, isn’t that limited to 1-2years? Also when you go to get your second mortgage wouldn’t they look at your first mortgage only being consent to let and take issue with it?

OP posts: