Key Post Has anyone lost their tracker through renting out their home?

Can anyone interpret this legal speak in my AIB tracker contract.
"The Borrowers are prohibited from granting any tenancy on the property being acquired. The property shall have vacant possession on acquisition."
This comes under the heading lettings.
 
Time said:
They cannot dictate what you do with your house. No court would allow their claims.

They can say you can't play Barry Manilow records if they want, don't make it legal.
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Thanks for coming back 'Time'. There are literally a volume of threads similar to this one - your the first that has mentioned this. No disrespect to yourself but just to add weight to your opinion above, are there others that are knowledgeable on the subject and draw the same conclusion??
 
Have they taken anyone to court over this clause? No, they have not. That speaks for itself.
 
While acknowledging your legal background Time I would disagree with the opinion that the L/O clause prohibiting the letting of the property cannot be enforced. The covenant was included prior to the loan being issued. Both parties were provided with copies of the loan agreement and the borrowers solicitor would also have viewed the L/O prior to completion. Inclusoin of a prohibition of leasing a property where the primary purpose of a facility was a residential mortgage could not be regarded as being either unfair or unforceable, as such clauses are reasonably standard in mortgage documentation. In the event that the mortgagor breaches this covenant, he/she.they would be in breach of the loan agreement and this would enable the mortgagee to enforce any associated penalty for breach of contrtact, which may include calling in the loan.
 
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Bronte said:
There may also be a clause that you are not allowed to rent it unless you inform the bank. I don't think I've seen a clause that says you can never rent.
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I have read twice the entire contract and there is no other reference to letting the property aside from the previous mentioned quote.

On reading the previous posts I now get the feeling that the statement refers exclusively to the vacant possession aspect of the agreement.
However my feeling is certainly not legally based!
 
matc66 said:
Can anyone interpret this legal speak in my AIB tracker contract.
"The Borrowers are prohibited from granting any tenancy on the property being acquired. The property shall have vacant possession on acquisition."
This comes under the heading lettings.
Click to expand...

I took out a tracker mortgage with AIB in May 03. There is no heading 'lettings' and no mention anywhere else re letting the property out.

It does say (point 12 in part 4 headed "Vacant Possession Of The Property") - "The customer must have vacant possession of the property, unless otherwise disclosed to and agreed by the bank".

I dont think this impacts on my ability to let it out??

I have the property let out for past two years all above board. I have never informed the bank other than notifying them of my change of address.
 
Just for the record...

Called PTSB in relation to my ECB+0.8% tracker today, and they confirmed that I can rent out and retain the rate. They're sending on confirmation in writing.
 
Just out of curiosity - Is no one afraid that by asking their bank they are giving them rope to hang you with, and alerting them to your intention to rent.
 
Folks

I have edited the second post in this thread to summarise the conclusions.

Has anyone anything to add to it or to contradict it?

Brendan

Brendan Burgess said:
Summary of responses in the thread


  • Unless your contract specifies that you will have to pay an investment property rate, you will not have to pay it.
  • NIB's contract specifies that you will move to the investment property rate
  • KBC has moved this customer to an investment property rate - although it's not clear why they did it
  • Other KBC customers retained their favourable rate
  • No customer of any other bank has reported having their rate increased.
  • PTSB has confirmed to many people that they won't lose their tracker. One poster managed to get it in writing. They change the classification to "investment property" which means that you are no longer covered by the Mortgage Arrears Code
  • Bank of Ireland/ICS allow don't change the rate either
Should I notify the bank that I have let my house out?
The contract usually specifies that you should notify your bank if you let the house. However, there doesn't seem to be any penalty for not notifying them.


But won't they know when I notify the Revenue to stop the TRS or when I notify the insurance company that the property is let?
You must do this anyway. It seems that the banks don't follow up on such notifications.

AIB's contract says that I can't let out my house
In practice, this means very little or, if it does, they don't enforce it.

If the rent is less than €10,000 could I claim the rent a room scheme?
Under the Rent a Room scheme, the house must be your Principal Private Residence. So this is not a runner.
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Brendan I just replied to an other thread so I will copy and paste my reply here if that ok:

"I originally took out my tracker mortgage with First Active (ECB +1.15) in 2007.

I am now considering renting out my property and wanted clarification from my bank (now Ulster Bank) if they would take away my tracker rate so I wrote to them asking same.

Here is the reply I got (This was only 3 weeks ago)

"Dear Mr X,

I refer to your recent communication with this office concerning your above mentioned account. I can confirm the following details on the above mortgage account.

Your current rate is Tracker 1.15 above ECB. This rate is a residential rate. Should you decide to rent out your current property it will become a Residential Investment property. At this time the interest rate will remain unchanged however, the bank reserves the right to change this stance in the future

I trust the above is to your satisfaction, however, if you have any further queries please contact us on 01-7092500

Sincerely

Mr X"

The part I have highlighted in blue is the bit that concerns me. So basically I can rent out my place now and keep my rate but next week they can bump me up to an extortionate variable rate if they wish.

Can they do this or are they just chancing their arm?

This really bothers me as I cant plan my future without clarity.

Not sure whether I should write back to them demanding a straight answer or to ask them to point out where in my contract it says they're entitled to increase my rate if I rent out my home.

Your thoughts?
 
I think they have given you a straight answer. They just havent given you the answer youd like. Would you prefer it if they told you that you would lose the tracker immediately.

When making your decision, just hope for the best and plan for the worst.
 
Hi Jigsaw

That is a very interesting piece of information.

I think that UB are chancing their arm. They have no right to move you off your tracker unless they specify it in the mortgage contract.

It's possible that they have done so with some cusomers and are awaiting an Ombudsman decision on the issue. So they are reserving their position.

Brendan
 
Ulster bank are indeed chancing their arm. I have a residential property with them, I rented it out many moons ago before we had all this dispute about clauses in contracts and investment properties etc. Ulster bank were never able to change my interest rate as I was contractually tied to a variable rate mortgage.

I've had disputes with them via the ombusdman on another property, but I've learnt that they are now playing game with names. Unless your contract specifically states that you will be moved to an 'investment' rate if you let it out then they cannot apply same. And don't go lookign for letters confirming this. Look at your contract, and if it has this clause then don't tell them you're renting and if it doesn't, well it doens't matter but getting letters back from them just might change things.
 
matc66 said:
Can anyone interpret this legal speak in my AIB tracker contract.
"The Borrowers are prohibited from granting any tenancy on the property being acquired. The property shall have vacant possession on acquisition."
This comes under the heading lettings.
Click to expand...

To me this has nothing to do with renting but to do with title (the legal eagles on here might be able to clarify better)

That you cannot change a title by creating a 'leasehold' this is not the same as renting to a tenant with a lease.
 
I have a residential property with them, I rented it out many moons ago before we had all this dispute about clauses in contracts and investment properties etc. Ulster bank were never able to change my interest rate as I was contractually tied to a variable rate mortgage.
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Bronte, can we be clear about this as it's very important.

Did they know you rented it out and did they try to change the rate and did you successfully argue your case?

Or did you just not tell them? If you just did not tell them, they could make a claim subsequently. They are unlikely to, but they could do so.
 
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