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Permissions to Let Property

1.3 Permissions to Let Property

Any property owner who has a mortgage or is not a freeholder may need to
secure the necessary permissions before they let the property.

If the owner is a leaseholder then the lease may contain a clause which
states either that sub-letting is not permitted or that the freeholder’s
permission must be obtained prior to subletting. It is very important
that this permission is obtained, because if the property is let to tenants
without it (even if permission is sought later) then the conditions of the
lease will already have been breached and the freeholder can take legal
proceedings against the leaseholder.

The freeholder’s permission will generally be a formality and this
permission cannot be unreasonably withheld, but the freeholder may make
a number of enquiries, for instance, if there have been complaints about
noise from former tenants this might be discussed and the leaseholder
might be required to satisfy the freeholder that they have addressed this
issue this time around. It is usual for the freeholder to make a small charge
for granting their permission.

If the freeholder does refuse permission then read the lease carefully
to find out what the lease says about granting permission and then seek
the freeholder’s reasons for his refusal. It may be possible to address and
satisfy any misgivings before there is a need to take further advice or the
threat of legal proceedings.

If there is a mortgage on the property, one of the terms of that agreement
may be that the owner obtains the lender’s permission before the property
is let, even if only one room is being let. This is because the mortgage
lender will be concerned to make sure that nothing is done that may affect
the value of the investment and the lender’s ability to recover the loan that
was made when the property was purchased.

It is important to check the terms of any mortgage. For many buy-to-
let mortgages permission to rent the property may be automatic, but
even in buy-to-let mortgages there may be conditions on the type of
let permissible e.g. ‘assured shorthold tenancies only’ [see section 3.1.2
for an explanation of assured shorthold tenancy] or a restriction on
housing benefit/local housing allowance tenants. If, as an owner, these
requirements are not fully understood then seek advice from a solicitor
- the one who assisted with the purchase should be able to help. If it is
proposed to let the property as ‘rooms’ or bedsits which will create a
House in Multiple Occupation (HMO) [see Part 2] this must be made clear
as special permission may need to be sough for this and conditions may be
imposed that will need to be met.

If the property was purchased for an owner-occupier on a standard
mortgage for home owners, then permission will need to be obtained to let
the property to tenants. The lender may increase the cost of the mortgage
or change its terms if permission to let the property to tenants is given.

Usually a lender will not object to one room in an owner occupier’s home
being let to a lodger.

If a property is being purchased that has an existing tenant in occupation
make sure that adequate enquiries are made about the tenant’s status. A
landlord needs to establish for themselves how long a tenant has been
resident and what rights they have and this may affect any purchase.