Before you sign anything
Some will, some will not, and only yours can tell you. It is the question most likely to stop a guaranteed rent arrangement after everything else has been agreed — so it is worth asking first, and we would rather you asked before you spoke to us than after.
The short version. Ask your lender two things: does my product permit a company let, and does it permit sub-letting. Use those words. Get the answer in writing. We cannot answer it for you, and any company that tells you not to bother asking is not one to hand your property to for five years.
It is rarely the guarantee itself. The thing that gives a lender pause is where the money goes: under this kind of arrangement the person living in the property pays a company, and the company pays you. The rent covering your mortgage arrives at one remove.
That matters to them if the mortgage ever falls behind. An occupier paying a third party in good faith, while the loan is not being paid, makes the lender’s position on recovering the debt harder to work out than a tenant paying the landlord directly. Every question below comes back to that one concern.
Published broker guidance also suggests lenders are more comfortable when the lease is held by a council or a housing association than by a private company, on the reasoning that a public body’s standards and conduct are a known quantity. We are a private company, not a council or a housing association. If your lender asks who would hold the lease, that is the answer, and it is much better given up front than discovered later.
Phrasing matters more than it should. A landlord who asks “can I do guaranteed rent?” often gets a no from somebody who has not understood the arrangement. These are the terms a lender recognises.
This is usually the deciding question, and it is the right words to use. A guaranteed rent arrangement is a lease to a company, which then finds the occupant. Some buy-to-let products allow that and some restrict letting to an individual tenant on a standard tenancy.
The company holding the lease places the occupier. Whether that counts as sub-letting under your terms is a question about your contract, and the answer is in it rather than in anything we can tell you.
Our leases run three to five years. A lender may have a view on granting a term of that length, particularly against the remaining term of the mortgage.
Some lenders want to read the agreement. Asking first is considerably cheaper than asking afterwards.
A yes on a phone call is not evidence. Ask for it by email or letter, and keep it with the mortgage paperwork. This is the single most useful thing on this page.
It is a different and usually harder question. Letting a property on a residential mortgage normally needs consent to let from the lender — a separate permission with its own conditions — and consent to let is not the same as consent to a company let on a multi-year lease. Raise both, rather than assuming the first covers the second.
This page explains what lenders tend to ask about and why. It does not tell you what your mortgage permits, what happens if you sign without asking, or how possession works if things go wrong — those depend on your specific contract, and the procedure differs between England and Wales, Scotland, and Northern Ireland.
Your lender is the authority on your mortgage. A broker can tell you which lenders accept these arrangements before you apply for one, and a solicitor can tell you what you are agreeing to. How to check that either of them is who they say they are.
Some will and some will not — it varies by lender and by product, and no one but your lender can answer it for your mortgage. What is consistent is the reason they care: under a guaranteed rent arrangement the occupier pays a company rather than paying you, so the money covering your mortgage reaches you at one remove. Ask your lender whether your product permits a company let and sub-letting, and get the answer in writing before you sign anything.
Because it complicates what happens if the mortgage falls into arrears. If the occupier is paying a third party in good faith while the loan is not being paid, the lender's position on recovering the debt and on possession is harder to work out than it would be with a tenant paying the landlord directly.
It can. Published broker guidance is that lenders tend to be more comfortable with councils and housing associations than with private companies, because the standards and the conduct of a public body are known quantities. We are a private company. If your lender asks who holds the lease, that is the honest answer, and it is better given before you sign than discovered afterwards.
No, and it is usually a harder one. Letting a property on a residential mortgage normally requires consent to let from the lender, which is a separate permission with its own conditions, and consent to let is not the same as consent to a company let on a multi-year lease. Raise both with your lender rather than assuming the first covers the second.
That depends entirely on your mortgage terms, which is why we will not guess at it here. What we can say is that it is a question you want answered by your lender or your solicitor before there is a five-year lease in place, not after. We would rather lose the lease than have you sign one you were not free to sign.
Yes. There is no exclusivity and nothing to pay before you sign, so there is nothing to lose by asking your lender first. If the answer is no, that is a straight answer and you have not spent anything finding it out.
There is no exclusivity, nothing to pay before you sign, and no reason to hurry the order of these two conversations. If your lender says no, you will have found out for the price of an email — and we would rather that than a lease you were not free to grant.
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