Renting out our family home

[EllyOlly]

We were in the process of selling our flat and buying a house when my dp had the opportunity to work abroad for a year. We're really excited by the opportunity and naively didn't think there would be any problem in continuing with the sale and renting the new place out until we got back. We'd done the hard slog of selling and buying and were nearly at the point of exchange. It will give us a lovely family home to move back to, rather than rent out our flat and come back to having to sell.

However our broker says we haven't applied for a buy to let mortgage so would be breaking the terms of our mortgage to let it out. It's too late in the process to reapply for another mortgage, and anyway the broker says there are issues with this anyway with it being our single property and us being out of the country.

He says it's very unlikely we'd get caught if we did just rent it out and not tell the lender. But DP and I are v risk adverse and have read it might affect our buildings insurance?

We don't want to lose the purchase as we love the house. And we absolutely don't want to keep the flat, for a number of reasons.

It seems like our only option is to sell the flat but not buy the house. What would you do?

Well you can't have both and that's that. It's either the house OR the job. It's not a nice prospect but it's the truth of the matter. Or you could stay in the house while DH goes abroad for a year.

Could you pay the mortgage on the house and leave it empty?

Be careful about becoming amateur landlords too, have you thought it through? What if your tenants defaulted? What if they refused to leave at the end? What if there was a huge repair bill? Are you aware of all your responsibilities as landlords?

Can you delay your departure a little? If you have lived in the house and then ask for permission to let you should be fine (quite common for people in your circumstance and fine with most mortgage companies if it's your only UK residence and you have lived it in / plan to come back and live in it) .

I'm no expert, however, I did the same only a couple of years ago (move abroad for a year and rented what was a family flat on a 'normal' mortgage). I was risk adverse too and would not go behind lenders back. I talked to the lender and they gave me permission to let on the agreement it was not a long-term situation, say 12-18 months. There was only a tiny amount of paperwork to make it official. It seemed like a fairly usual request that they would come across often and didn't seem to have any issue with it.

I'm not quite sure why it being your only property would make any difference at all, or you being out the country for that matter. Maybe try and talk to the lender direct?

HTH

The problem for the OP is that the lender thinks they are trying to circumvent their rules on BTL mortgages rather than their circumstances have unexpectedly changed recently.

Thanks everyone.

If it came to deciding between the job and the house, we'd choose the job without a doubt. It's a lovely house and we would be very happy there. But the opportunity of being in another country and all the experiences that will bring us are too exciting to give up.

With regard to being a landlord, yes this scares me too. But by my calculations we should be able to afford the repayments, and get a letting agent to deal with everything. Plus a little to put aside for repairs etc. We'd not make a profit, but that's okay as this isn't a financial move.

Sadly, we couldn't afford to leave it empty. Or delay the contract start date.

I realise the timing does look dodgy as we wouldn't live in it before moving abroad.

We thought we'd made lives complicated enough buying, selling and moving abroad - now this!

We want to carry on with the sale though. Is it such a terrible idea to come off the property ladder for a short time....?

This is quite terrifying. You didn't know that renting out the place without mortgage lender permission breaches the terms of the mortgage? You didn't know that if you do that, the lender can repossess? And you didn't think that you would need landlord insurance?

there was a thread on here a while back where someone (not the poster) had rented out their house and not changed the insurance. The tenant burnt the house down and was also injured. No insurance - goodbye house, but not goodbye mortgage. That is the risk you will run.

oh yes - legal requirements: deposit protection, gas safe, smoke alarms. Maintenance. Legal expenses insurance. Malicious damage insurance. Got it all covered?

being landlords out of the UK is not a problem.

I used to rent out my flat. It was all above board but a huge pain in the arse. I'd just forget about the house and enjoy the opportunity abroad.

Buy the house

THEN worry about the lender and renting it out

Ignore the broker. You're not buying it TO let, you're buying a family home.

So yes, it is a bad idea to get off the property ladder for a year

I think you should live in it, DP starts his job then you join him.

Circumstance change, lenders know that. You've just been honest with the broker and he's obliged to tell you what he think will happen.

and wrt legal requirements, get a letting agency to handle it for you

I honestly wouldn't hesitate in your position OP and I'm risk averse too. You want a nice house to come back to so buy it.

There was a similar thread the other day but they had bought the house and the mortgage company did not just understand and they had to live in it for at least 6 months before renting it out.

I would keep the flat so your on the property ladder then sell when your back in a year.

Can you start a dialogue now with the lender re "Consent to Let" - explain your circumstances and ask if/when they'd allow you to let the property out. At least then you know factually whether this is doable.

I'd also question why the broker ruled out a BTL mortgage. Is it to do with the available deposit, or something else? Your original wording suggests that the broker doesn't feel they have enough time to put through a BTL application, but this is really not much work given that they have all your details and payslips etc already. It is harder to get a BTL mortgage without a residential mortgage, but some specialist (i.e. more expensive) lenders will do them, and my DP currently has one with NatWest who can evaluate people on an "exceptions channel" when necessary. May be worth trying another broker - I (and I'm sure lots of other people on here) can point you in the direction of a speedy one.

If I were you I'd not sell the flat yet. Instead I would let it out whilst you are away. When you come back you can then either sell it and buy a house or keep it rented and buy a house.

No point in buying a house now if you are going overseas imminently, that is a whole lot of stuff to sort out in itself. Besides, you might find you don't actually return as planned, and therefore don't need to buy a house at this point in time.

I would talk to your lender. Many people with UK mortgages rent out their main home while working temporarily abroad. Banks etc usually increase the rate they charge to BTL levels.
Don't let it without telling your lender.

We talked to our lender and they told us to just do it! (Circumstances similar to yours op) we had lived in it first though so not sure if that helped.