Government eases subletting restrictions and asks lenders to do the same
The government is taking steps to make it easier for shared owners affected by building safety issues to sublet their homes by relaxing its subletting restrictions, and has written to mortgage lenders to encourage them to do the same.
Presently in any shared ownership homes delivered through the government grant funded Affordable Homes Programme, subletting is restricted in all but “exceptional” circumstances. The restriction was introduced to prevent homes built with public funds from being used for commercial gain.
But to improve the options available to shared owners in homes delivered through the Affordable Homes Programme, the government has now amended its grant funding guidance to make it clear that issues of building safety, such as cladding, should be treated as an exceptional circumstance.
This will therefore allow shared owners to sublet their homes, with the agreement of their freeholder.
However, the government has acknowledged that in order for shared owners to sublet their homes, they also require the permission of their mortgage lender.
The Minister for Housing, the Rt Hon Christopher Pincher MP, has therefore written to mortgage lenders encouraging them to accept subletting applications from affected shared owners.
“I do hope that you appreciate the position that the affected shared owners have found themselves in with regards to building safety through no fault of their own, and that you will make every effort to approve their sub-letting requests”, said Mr Pincher’s letter to lenders, dated 12th January.
To reduce the costs involved, the Minister for Housing has also requested that mortgage lenders consider extending the period a shared owner can sublet their home (consent-to-let period) before needing to convert to a buy-to-let mortgage. To further reduce fees, the Minister for Housing has also asked mortgage lenders to waive any premium associated with the extension of the consent-to-let period.