What is consent to let and how is it different from a buy-to-let mortgage?

Full answer

Consent to let is formal written permission from a residential mortgage lender allowing a borrower to rent out a property that was mortgaged on the basis it would be the borrower's own home. **Why lenders require it** A standard residential mortgage is priced and underwritten on the assumption that the borrower lives in the property. Letting it out without telling the lender is a breach of the mortgage terms and could, in theory, allow the lender to demand immediate repayment or take other action, so borrowers who need to rent out their home -- even temporarily -- must ask permission first. **Typical situations where people seek consent to let** - Relocating for work for a fixed period and intending to return to the property. - Moving in with a partner temporarily while deciding whether to sell. - Struggling to sell a property and choosing to rent it out while continuing to market it. - The let-to-buy scenario, where a homeowner moves to a new main residence and rents out their previous home. **How it differs from a buy-to-let mortgage** Consent to let keeps you on your existing residential mortgage rate and product, usually with a small administration fee and sometimes a modest increase in interest rate (commonly around 0.5 to 1 percentage point) for the period consent is granted. A buy-to-let mortgage is a completely different product, specifically underwritten on rental income (lenders typically require the rent to cover roughly 125%-145% of the mortgage interest), usually has different (often higher) interest rates, and is intended as a long-term letting arrangement rather than a stop-gap. **Time limits** Most lenders grant consent to let for a limited period, commonly six to twelve months, and may require you to reapply, switch to a buy-to-let product, or sell the property if you want to continue letting beyond that. Lenders vary considerably in how flexible they are about renewing consent repeatedly. **Insurance and tax implications** Once a property is rented out, standard buildings and contents insurance for owner-occupiers is no longer appropriate -- you generally need landlord insurance instead. For tax, rental income becomes taxable in the usual way (declared via Self Assessment if your gross rental income exceeds £1,000 a year), and mortgage interest relief for individual landlords is restricted to a 20% tax credit rather than a full deduction against rental profits, under the Section 24 rules. **Worked example** A homeowner is seconded abroad by their employer for nine months. Rather than selling, they ask their existing lender for consent to let, pay a £150 admin fee and accept a 0.75 percentage point increase on their mortgage rate for the period, and rent the property out through a letting agent. Because the arrangement is temporary and disclosed, they remain compliant with their mortgage terms, and they revert to a normal residential rate when they return and stop letting the property.

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