Consent to Let vs Buy to Let: What’s the difference?

What is Consent to Let?

Consent to Let is a formal agreement between you and your mortgage lender, giving you permission to rent out your property for a set period of time. If you’d like to rent out your property without switching from a residential mortgage to a Buy to Let mortgage, you must get your lender’s consent before taking in any tenants. This is because when you buy a property using a residential mortgage, there’ll usually be a clause within your mortgage agreement that says you must live in the property yourself. 

If you let the property out without permission, you’re likely to be in breach of your contract. In some cases, this could even be considered mortgage fraud. Your lender might repossess your home or insist that you repay the remainder of your mortgage immediately. 

Why do people get Consent to Let?

There are lots of reasons why people get Consent to Let, from fixed term mortgages, temporarily leaving their home to go travelling, or moving out to a new place. Here are the 4 main reasons why people apply for Consent to Let mortgages:

1. You have a fixed term mortgage

If you’ve got a fixed-rate mortgage and you’d like to move house before the end of your fixed-term, renting out your property could help you avoid Early Repayment Charges (ERC) and fees. You could get Consent to Let for the remainder of your fixed-term and switch to a Buy to Let mortgage or sell the property once it’s ended.

2. You’re going travelling

If you’re going travelling, getting Consent to Let your property will make it easier to pay your mortgage while you’re away. If your property is in a popular or expensive area, you might even make enough to fund your travels!

Learn more: How much tax do you pay on rental income?

3. You’re moving in with someone else

If you’re moving in with your partner, friends or family but you aren’t ready to sell your own property just yet, Consent to Let can give you time to decide on your long-term goals. If you need to pay rent or contribute towards the mortgage on your new home, renting out your existing property may help you increase your income.

You might also like: What you need to know about buying with a partner

4. You’ve moved house and you’re struggling to sell your old one

If you’ve moved house but you’ve been unable to sell your existing property, getting Consent to Let could allow you to make an income from your old home, without having to commit to a Buy to Let mortgage. For example, you might decide to rent it out for 6 months to a year before putting it back on the market.

How long does Consent to Let last? 

Most Consent to Let agreements last for 24 months or less. If you need your agreement to last longer than this, your lender might agree to a longer-term arrangement. They may charge an annual fee for this extension, but the fees can sometimes be worthwhile if switching to a Buy to Let mortgage would be more expensive. 

How to get a Consent to Let

Many lenders will let you apply for Consent to Let online. This is often the quickest and easier way to apply. Alternatively, you might be able to request an application form over the phone, in branch, or download one online before posting it back to them. Each lender’s process is slightly different, but you’ll usually need to explain why you need Consent to Let and how long you need it for. 

You might also need to provide proof, such as travel documents, a contract of employment if you’re moving away for work, or a Mortgage in Principle for your new property. 

Is Consent to Let better than Buy to Let?

For some people, Consent to Let is a better option in the short-term than switching to a Buy to Let mortgage. For example, if you only need to rent out your property for a short period of time, or want to avoid Early Repayment Charges (ERC) or a higher interest rate by switching to a Buy to Let deal. However, Consent to Let isn’t always better than Buy to Let. If you’d like your property to become a long-term source of income or you’re hoping to invest in a number of Buy to Let properties, a Buy to Let mortgage might be the better (or only) option.  

A ‘let to buy’ mortgage could also be an option. This is a type of mortgage designed to help you buy a new home to live in, while keeping your current home and turning it into a rental property. You’ll take out a standard residential mortgage on your new home and switch the mortgage on your current property to a buy-to-let mortgage.

Learn more: How to remortgage to buy another property

Is it difficult to get Consent to Let?

Getting Consent to Let is usually a fairly straightforward process since most lenders are happy to give customers permission to rent out their homes for a short period of time. There are exceptions, however. If you bought your home through Help to Buy or a shared ownership scheme, subletting your property won’t usually be allowed unless you’re a member of the Armed Forces. 

Do mortgage lenders give Consent to Let?

Although rare, some lenders might refuse to give Consent to Let. Lenders will usually have a set of criteria that needs to be met before they give a borrower permission to rent out their property. 

Income requirements

Some lenders have minimum income requirements, meaning you may need to earn a certain salary to be eligible for Consent to Let

Equity requirements

Lenders might also have minimum equity requirements. If you bought your property with a small deposit, you might struggle to get Consent to Let.

Mortgage length

Some lenders will only approve Consent to Let applications from customers who’ve been with them for a set period of time. If you’ve held your mortgage for less than a year, for example, you might find it harder to get Consent to Let than someone who’s held a mortgage with the same lender for 10 years. Talk to your lender to find out whether you’re eligible. 

Mortgage payment history

Lenders are less likely to approve Consent to Let applications for customers who’ve failed to keep up with their mortgage payments.

What happens when Consent to Let runs out?

When your Consent to Let agreement runs out, the original conditions of your residential mortgage will apply. This means you’ll no longer be able to rent your property out to tenants.

Your lender might be willing to extend the Consent to Let, particularly if you’re only planning to rent out the property for a few more months. It’s a good idea to speak to your lender and find out what options are available before your agreement runs out.

Can you switch from Consent to Let to Buy to Let?

Yes, it is possible to convert your existing Consent to Let mortgage. If your lender is unwilling to extend your Consent to Let, it might be possible to convert your existing mortgage into a Buy to Let mortgage. Switching to a new mortgage will usually result in a new interest rate and changes to your repayments, particularly if you switch from a repayment mortgage to an interest-only Buy to Let. 

Learn more: How to get a buy-to-let mortgage

Do you pay tax on Consent to Let?

Yes, you’ll usually need to pay tax on your rental income, even if you’re using Consent to Let instead of Buy to Let. There are tax advantages to renting out your property, though. While your property is being rented out, you can claim back 20% tax relief on your mortgage interest.