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Power of borrowers to grant tenancies

This content applies to England

Borrowers' powers to grant tenancies.

Mortgage limitations

A borrower has a general power to grant tenancies.[1]

However, mortgage agreements may contain terms that prohibit the borrower from granting tenancies, either absolutely or without the lender's prior permission.

Buy-to-let mortgages

Buy-to-let mortgages are granted to enable the borrower to buy a property to let.

Generally, buy-to-let mortgage agreements will include consent to grant tenancies, but the borrower may be required to inform the lender about details of lettings.

Effects of breach of mortgage terms

Where a borrower has let a property in breach of the mortgage agreement, the tenancy is still binding on both landlord/borrower and tenants, and the tenants will continue to enjoy their rights under the tenancy until it is terminated. See the page on Tenancies binding on the lender for more information about the rights of tenants in this situation.

If a landlord/borrower wants to evict the tenants, s/he will have to give notice requiring possession to the tenants and follow the eviction procedure appropriate to the type of tenancy granted. See the section on Security of tenure for information about the different types of tenancy and the related eviction procedures.

A lender can bring possession proceedings against the borrower if s/he breaches the terms of the mortgage agreement. See the page on Possession proceedings by the lender for information about the possession procedure which the lender must follow and the effects of the possession order on the tenancy.

[1] s.99 Law of Property Act 1925.

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