Consent to let on a residential mortgage

A property with a residential mortgage can only be let out with the lender's permission, called consent to let. A residential mortgage is lent on the basis that the borrower or their family will live in the home. Renting it out without consent usually breaks the mortgage terms, even if the payments are kept up to date.

Consent to let is meant for temporary situations, such as a job move, a posting abroad, moving in with a partner or being unable to sell. Lenders that agree usually allow a set period, often a year at first, and may extend it, though some lenders do not offer consent to let at all.

To get consent to let, the borrower applies to their current lender, explaining why they want to let and for how long. The lender checks the mortgage is up to date and the plans. It may charge an admin fee, add a loading to the rate or move the loan onto a different product for the letting period.

Consent is usually given as a letter setting out the terms, including the length of the let. Landlord insurance replaces standard home insurance, and the tenancy must meet the rules for private landlords, including deposit protection and the safety checks that apply to all lets.

Rental income is taxable, and the borrower must declare it to HMRC. Lenders do not usually ask for proof of right-to-rent checks, but landlords in England must carry them out on every adult tenant before a tenancy starts.

Having a lodger is treated differently from letting the whole property, because the borrower still lives in the home. Many lenders allow a lodger without formal consent, though some ask to be told and a few want written agreement. Holiday and short lets of the whole home usually need consent, and many lenders refuse them.

Insurers also need to know about lodgers or short lets, because standard home policies can exclude them. The Rent a Room scheme lets homeowners earn some rental income from a lodger tax-free, subject to HMRC rules.

Letting a home on a residential mortgage without the lender's consent is a breach of the mortgage terms. If a lender finds out, it can ask for the let to end, add charges, move the loan to a higher rate or, in serious cases, ask for the loan to be repaid. Insurance may also be invalid during the let.

Where the borrower never intended to live in the home, the lender may treat the case as mortgage fraud. Applying for consent before any tenant moves in avoids these risks.

Where a let is likely to last longer than a lender's consent period, switching to a buy-to-let mortgage is usually the long-term route. A buy-to-let mortgage is assessed mainly on the rent, needs a larger deposit than most residential loans and is priced differently. The switch is a remortgage, so early repayment charges may apply.

Some borrowers move to a let-to-buy arrangement, letting their current home on a buy-to-let mortgage and buying a new one on a residential loan. How landlord mortgages are assessed is explained in the buy-to-let mortgages section, which covers rental stress tests and deposits.