Can I let my house without permission if I have a mortgage?
When letting your home or apartment in the Netherlands, it is essential to discuss and asses your financial situation with a professional.
On the 23rd of April 2019, the Financial Services Disputes Committee (Kifid) handled a case concerning a consumer who was letting his property without the written permission from his Bank (logo with Orange Lion).
The person in question relocated to Belgium for two years. Below is a summary of what happened and Kifid’s decision on the matter.
Before his relocation, the expat asked for permission from the Bank by writing an email:
“I want to ask permission to let my apartment [address]. I want to do this through a broker specialized in expat rental. I read that this was possible as the owner of my apartment if I am seconded abroad. (…) If you give your approval, I could start the process of transferring to […]”.
13-07-2017 and 26-07-2017
The Bank asks for more information and documents before they could assess the situation. The Consumer never sends that information and assumed that his initial email is sufficient.
Nothing else happened in 2017 anymore. The story continues in 2018(!).
One year later
The Consumer replies with an email to inform them about his new job. He also asks for permission again to rent out his property.
16-08-2018 and 07-09-2018
The Bank asks for information regarding his relocation.
The Consumer informs the Bank that he cannot provide the information asked.
10-10-2018 and 23-10-2018
The Bank sends a letter to confirm they don’t approve the Consumer’s request.
Research shows that the Consumer has a tenant in the apartment. Furthermore, sending a letter to confirm once more there’s no approval to do so. Above all, the letter confirms the Banks’ rights. The Bank confirms that they’ve registered the Consumer at bank and mortgage specific registers(!). As a result, the entries notify other Banks when doing their due diligence. Furthermore, the refinancing will be more difficult.
The Bank gives the Consumer some time and two options:
Selling the apartment OR refinancing the mortgage before 01-06-2019.
The Consumer sends an email not agreeing with the offered solutions.
After that, the Bank sends a letter offering a new solution: if the tenant moves out before 01-01-2019, the Bank will drop the case.
The Consumer files an official complaint in contrast to following the Banks’ rules.
After receiving the claim, the Bank rejects it and asks for a copy of the termination of the rental contract so that their asset is safe.
Finally, Hypocasso (mortgage debt collection agency) informs the Consumer that the Bank claims the mortgage debt.
As a result, the Consumer repays the entire debt, including penalties and fees.
The Committee believes that the Bank did not act contrary to standards of reason and fairness when implementing its policy. Even more, the Bank has not violated the principles of proportionality and subsidiarity or its duty of care. Therefore, the Committee believes that the Bank was entitled to claim the mortgage debt from the Consumer on legitimate grounds. Source: Kifid
Always let a professional assess the situation before considering renting out your property.
If you’re dealing with a situation where your employer relocates you, then there are two options.
- First of all, there is the option to sell your property.
- The second option is to refinance your mortgage to an investment mortgage.
The goal of an investment mortgage is letting your property with written permission from your bank. Hence, there are no issues from your bank and no penalties to pay. Contact us if you have questions concerning letting your home.