Mortgage lenders are tightening the rules for "accidental landlords" letting out homes they bought with residential mortgages, reports the Financial Times.
Homeowners who want to let out residential property for a short time normally require "consent to let" from their lender. In the past, this has usually been a simple process, with a small admin fee payable; borrowers, so long as they were up to date on their mortgage payments, were usually permitted to let. But brokers are reporting that lenders are tightening the rules, insisting that lenders attend interviews, pay higher interest rates or even switch to buy-to-let mortgages, which typically allow a much smaller loan-to-value ratio and have less attractive interest rates.
Stricter conditions will surely mean that more people are tempted just to let out their properties, without informing their lender, and hope to go unnoticed. Our advice to anyone in that position is to resist the temptation. Most residential mortgages will require the lender's permission to let out the property. Ignoring that clause puts you in breach of your mortgage conditions and leaves you open to penalties from the lender.
Not all lenders take such a strict line, so it can be worth planning ahead and shopping around if short-term letting may be on the cards for you.
