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What consents and permissions do I need to let my property?

August 12, 2019

Before you commit to the hard work of getting your property ready to let, start by making sure that you are actually allowed to let the property.

You might take the view of it’s your property and I can do want, but that is not necessarily the case. Unless you love to live life on the edge, you really should make sure that you have obtained the correct consent/permissions from the relevant parties.

  • CONSENT FROM THE FREEHOLDER  – If you are a leaseholder rather than the freeholder of the property, you will need to get permission from whoever owns the freehold (or whoever is manging it on the freeholder’s behalf).  As a leaseholder, you will have a lease – which you would have received when you purchased the property.  This sets out what you can and can’t do with the property.  It is unusual for leases to state that you are not allowed to let the property out at all, but there might be stipulations about the type of tenancy you can issue.  So check your lease.
  • COUNCIL TAX – It is worth quickly noting that if you have just bought the property, you will be liable for the council tax from the day of completion until the day the new tenancy commences – and when the tenants move out, you will be liable for any gap before new tenants move in.  Some councils offer short-term exemptions for properties that are empty or undergoing refurbishment – but, of course, you will need to make the council aware of the situation, or they will automatically bill you for the whole amount.  Check your local authority’s website to find out what the rules are, and often there will be an online form you can submit to claim an exemption.
  • REGISTERING WITH HMRC – While you are going through all this effort with the aim of making some rental income, unfortunately, you won’t get to keep all of it: you will need to give a good slice to the government.  If the property you are renting out is owned within a limited company, then there is nothing you need to do at this point: your company will just start filing its accounts, tax returns and annual confirmation statements as they become due.  There is also no action needed if you own the property as an individual but you already submit a self-assessment tax return – for example, In this case, you will just report your property income on the tax return you would be submitting anyway.  However, if you are currently taxed solely via PAYE, you will need to inform HMRC that you are going to have income from the property to declare.
  • OVERSEAS LANDLORD – There are more fun and games if you are classed as an “overseas landlord”, which is someone who spends more than six months of each year outside the UK.  If you are an overseas landlord and you don’t fill in the NRL1i form, your tenant or letting agent, should deduct the basic rate of tax before passing your rental income to you.  If you want to wisely avoid this, submit your application to receive your gross income and sort out the self-assessment later.
  • CONSENT FROM YOUR MORTGAGE LENDER – If you have a mortgage on the property, it is crucial that your mortgage lender knows you will be letting the property out and is happy for you to do so.  If you have bought the property specifically to let out, you should have bought the property using a specialist buy-to-let mortgage, so the lender is going to be clearly happy for the property to be rented out.  However, that still doesn’t mean you can do whatever you like – the lender will have made certain stipulations in your mortgage offer about the types of tenant they are happy for you to rent the property out to.  These restrictions will be stated in your mortgage offer, so refer back to that if you are not sure.  If you are renting the property you currently live in, you are an “accidental landlord” – for example, you need to move to a different area for work but haven’t been able to sell your home, or you have decided to move in with your partner but want to keep your old home to rent out.  If you have previously been living in the property, you will have a residential mortgage, which means that the lender expects you to be living there as your main residence and won’t have agreed for it to be rented out.  At this point, you might assume that – as long as you keep paying the mortgage – the lender won’t notice if you just rent it out.  This is not the case – so don’t do that!  Instead – obtain consent to let.  Lenders are often happy to give you permission to rent the property out for a limited period of time because they are aware that circumstances change and they don’t want to punish “accidental landlords”.  If you speak to your lender, they will often give you consent to let for anything up to a few years.

Congratulations!  You are officially through the most tedious part of the process and have obtained consents from all and sundry.  This might not be the worlds most exciting topic, but nevertheless, it is an essential part of the process of letting your property.

If you have any questions or need any advice, please do not hesitate to contact us on 01243 252984 and a member of our team will be only too happy to help.

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