Updating post from Reddit.
Hi,
I recently opened a BTL ltd company and have bought a 4 bed property. I've been trying to find a family to rent out the property but it has been difficult. Its been 4 months already.
My letting agent has told me that he has had an offer from a company "A" which works with insurance companies to provide temporary housing to families of homes which have sustained damage and subsequently uninhabitable for short or long periods of time. They only house families of one household at a time and no more than 5 individuals.
The offer they are giving is very good. basically only £50 less per month from what i wanted and the contract will be for 5 years. with maximum of 8% increase every year in rents. This will cover me for my entire fixed rate mortgage term of 5 years.
I am trying to find out whether this is legal to do or not.
The terms and conditions of my mortgage state that:
"the tenants of this property will be a maximum of 5 individuals forming a single household. Tenancies for Family members, corporates, housing associations, HMOs, student lets, holiday lets and individuals with diplomatic immunity are not accepted."
It also states
"the tenancy for this property will be a single AST (or Short Assured Tenancy/Private Residential Tenancy in Scotland) of no more than 36 months, but must contain an annual break clause. Single household only - Multiple tenancies not accepted."
The company "A" have asked if our terms allow subletting or serviced accommodation". And as per the terms and conditions I do not see anything like that.
Before I contact the bank who provided the mortgage directly to clarify.
Is there someone who has already done this type of agreement? can someone advise what to do?
The offer is very lucrative but at the same time I want to be sure.
Your first mistake was buying a 4 bed btl unless you are doing a hmo they will be hard to rent out. 2-3 bed are a little easier to find tenants as most renters will be young couples or families saving for a deposit. Know your market, an empty property is not making you anything.
My original plan was to get a 3 bed in the area I bought the 4 bed, however there was a deal that came through through a friend. He was giving his 4 bed detached house bedroom away for the price of a 3 bedroom as he wanted to move ASAP. So the deal was good. I will probably have to reduce the price to get more tenant enquiries. Until now I had been pricing it as a 4 bedroom similar to other 4 beds in the area.
Rent to rent is going to be vey risky after renters rights.
Why not take a more active role in fjndjng your tenants.
Thanks for your reply.
What policy is Labour bringing that will be problematic for my case specifically.?
At the minute I just want to know if this is legal to do or not.
The agent I know is doing it's best. I've been sending the agent inquiries from my friend circle as well.
You will not be in compliance with your mortgage deed as the contract will not be an AST. It will be more than 3 years and will not have an annual break clause. You are entering into a contractual tenancy where the tenant may change the occupier. Not sure it’s subletting though.
It’s potentially a great deal, but you have to decide whether to ask the lender to amend their terms so you’re in the clear with them.
Someone will probably come along in a minute and say the lender may never check so just wing it.
Yes, I agree it will not be an AST, I think my best course would be to discuss with the lender and if they agree to only proceed then