1. Lenders Permission To Rent A Buy to Let Property. – Inherently this includes permission to rent – or does it?
a. Even this type of mortgage will exclude certain tenancies.
b. E.g. it is likely that a landlord’s family-members are excluded from occupation.
c. Certain tenant genres may also be excluded such as knowingly letting to benefit recipients.
d. Therefore, it is important to always establish whether there is either implied or actual permission.
e. A former landlord-home will probably require lender-permission to rent.
f. Lenders are likely to require any tenancy to be an AST and contra wise may exclude common law and commercial tenancies.
g. Lenders’ permission to allow alterations and extensions: probably requires lender consent to build a property extension.
h. Some lenders restrict the number of tenants to say four tenants.
i. So if you extend your four-bed apartment to five bedrooms, your lender might contend that your mortgage product does not permit renting to five tenants.
j. In such circumstances the borrower must do one of three things:
i. Swap mortgage products to enable an additional tenant. However, such a swap is likely to come with a lower loan-to-value and a higher interest rate.
ii. Switch mortgage lenders. This may not be as easy as it sounds in a depressed market.
iii. The only remaining option might be to do nothing. Certainly do not waste money renovating if this will breach the terms of the mortgage agreement.
k. Lenders might require confirmation that borrowers have appropriate permissions before in turn permitting renovations
l. Lenders might demand that a damp basement must be ‘tanked’ within say three months of granting a mortgage, meantime withholding a retention. But if the property is a listed building the local authority may not permit it. So unwittingly, conflicts can arise for the unwary.
2. Building Control Approval – Permission is likely required prior to conducting structural alterations.
a. Any structural alterations, even replacing a bathroom may require ‘Part-P’ permission to fit an electric shower unit. Likewise other ‘wet’or ‘notifiable locations’.
3. Planning Permission – This may be required if it is outside ‘Permitted Development’, e.g. a large extension requires permission, whereas say a small porch will not – unless it is a listed building or in a conservation area when normal permitted development requires written permission anyway). After 4 to 10 years following unpermitted works, any required permission is deemed granted and no longer an offence.
a. If the Property is a ‘Listed Building’, ‘Planning Permission’ is required.
b. If the property is in a ‘Conservation Area’ yet again Planning Permission is required to lop. top or fell a tree.
c. A house in an area designated as covered by Article 4 requires planning permission under the Town and Country Planning Acts and Orders.
4. Ex Local Authority Homes – If the property was formerly owned by a local authority then there is likely to be a restrictive covenant in the deeds preventing alterations to the external appearance – without the local Council Estates Department’s permission. So even if a small porch would e within permitted development permission may still be required.
5. Mandatory Licensable Property – A property is in England or Wales and comprising three or more storeys and 5 or more unrelated tenants is classed as a large HMO and as such requires LA approval to be let as a Mandatory Licensed Property.
6. Discretionary Licensable Properties – This also require permission to let and this covers Additional and Selective Licensing. See previous articles by the author on this topic.
7. Sui Generis – A property is in England or Wales and comprising seven or more unrelated tenants is classed as a large HMO and is in also a category of its own called ‘Sui Generis’. As such this requires LA approval to rent regardless of the number of storeys.
8. An Empty Property pending letting also requires permission from any home insurer if vacant longer than a set period – normally 30 days.
9. A Landlord’s or Owner’s Permission is required to do anything stipulated within a tenancy agreement which requires the landlord’s permission: permitting pets, subletting as an inferior landlord and or tenant, changing colour / decor, etc. Similarly, proposed works at or near a neighbouring property-boundary (vertical – walls, or horizontal floors and ceilings if flats) will require notice and Party Wall Act (1996) consent or arbitration with any adjacent owner.
10. Permission to Act subject to Declaring Personal Interests. Failure to declare a personal interest can result in a breach of Consumer Protection Regulations. If there is a presumption of a personal interest this can create a conflict of interest. Once the personal interest is declared to the other party and that party agrees, or permits the act, then there is no conflict. E.g a landlord must be told that a letting agent or staff member is related to the new tenant or to a service provider to avoid a presumption of impropriety. The tenant might only be paying half the true value of the rent or the contractor may not be competitive both to the detriment of the landlord. Once informed the landlord is likely to scrutinise such a deal to ensure correctness before granting permission to rent to the relative or agree to works by a relative.