Hmo Vs Tenants Vs Lodgers

[jaymacabc123]

Hi hoping for some advice pls:
We own our home (still mortgaged) and as we’ve not been able to sell it (on market for ages ) we are thinking of renting it out. It has 4 bedrooms. 3 bathrooms (but only one of those is en-suite)

We have a few ideas we are considering:

1) renting it out as one full property (ie a “normal” rental)

2) taking on 3 or 4 lodgers and us not living in the prop at all.

3) taking on 2 or 3 lodgers and ya retaining our own bedroom so we can come back to this house on weekends only (we wld be working in another county)

What are the advantages and disadvantages in your opinions?

We would also have to let mortgage provider know of course and can any of you see any reason our mortgage provider may not agree to allow us to do this?

We will also let our home insurance know obv.

We want to be legal and above board but really need to do something as property just isn’t selling.

[jaymacabc123]

Ps asking this in law as I’m unsure what we need to do legally if we have tenants etc and if we retain one bedroom for occasional use how that affects HMO or even if HMO is needed. .... just trying to work legalities to see if the ideas we thinking of are feasible

[EDDIE51]

I assume you do know that you MUST get the mortgage company permission before you rent it out? Plus the mortgage cost will go up, possibly quite substantially? In reality you do not 'Own' the house until the mortgage is paid.

[Neveracrossword]

Eddie, the mortgage cost MAY go up (and possibly substantially) but it is not always the case. I know this from experience.

[jaymacabc123]

Hi eddie51 thanks for ur reply - yes we know we must let mortgage co know (i did mention that in my original question). Wasn’t aware it might put price up though.

[jaymacabc123]

Neveracrossword ty for your input - let’s really hope that our mortgage provider doesn’t put it up :(. Any tips on how to possibly avoid increase ? Or is it simply up to the individual provider ?

[Canary42]

The Mortgage Company has really got you by the short and curlies, and also may be concerned that deterioration of the already apparently unsellable property might reduce its value below the outstanding equity.
We have one or two law experts in the AB membership, and I expect they will be along some time with more professional answers.

[Barmaid]

1 and 2 would require informing your mortgage co and prob changing to buy to let.

3 is interesting. You would effectively be just having lodgers and may not need to change mortgages.

1 and 2 would require assured shorthold tenancy agreements and deposits and then difficulty getting tenants out. 3 would not be an ast it's a simple licence and much easier to shift awkward lodgers.

[jaymacabc123]

TY barmaid and canary for your replies. Not even decided if we deffo gonna do this. It’s just an idea that we looking into. Canary the mortgage co unlikely to know it’s “unsellable” as they wldnt even know it’s been on market surely? The difficulty (according to the agents at least) is that our property is at the very top of the price range for this area and so it’s harder to sell. Whether or not that’s an excuse or not we won’t know of course.

[jaymacabc123]

Oh and I don’t know if this makes much diff to mortgage provider when we get permission but currently the value of our property far exceeds the equity. More than double.

[ladybirder]

Thought about reducing the price of your property Jay? You say it is at the top of its price range so reducing it might help sell it and save you a lot of hassle in the long run.

[Barmaid]

The other benefit of maintaining your own room there is it remains your home so you can come and go as you please and thus ensure it is kept in good condition. With renting out save for inspections on notice you must give the tenants quiet and peaceful enjoyment.

[Canary42]

My concerns are unjustified then. You're right about their knowledge of the difficult you've had in selling, and the equity is certainly fine. Perhaps I let my distrust (from experience) of Mortgage Companies run away with me. I was right about the expert coming along later ;-)

Good luck.

[ubasses]

From the Mortgage point of view, 1 & 2 would most likely require you to have a Buy to Let Mortgage and Lanlords Insurance.
3 Should let you you keep existing Mortgage, but the Insurance would increase.