Risk check · UK (England law notes)
Mortgage, freeholder and insurance restrictions: is it allowed under your contracts?
Something can be perfectly legal and still be forbidden by your mortgage, your lease or your insurance policy. Letting your home out, taking sharers, short lets, a company let, letting to a relative or running a business from the property can all breach a contract even when no law is broken.
This check separates the two questions: what the law says, and what your contracts say. Only your own documents — the mortgage offer and conditions, the lease, the policy wording — can answer the second.
The eight questions — law and contracts are different
Something can be legal and still be forbidden by your mortgage, lease or insurance. Check each one separately.
1. Is it legally permitted?
Usually the arrangement itself is lawful. Some contract terms are now overridden by law: since 1 May 2026 terms in mortgages, superior leases and (from renewal) insurance that ban letting to families with children or to people on benefits have no effect in England, with narrow exceptions (Renters' Rights Act 2025, ss36–38). Leases, mortgages and policies agreed before then that allowed lets on assured shorthold tenancies are now read as allowing the new assured tenancies (Schedule 6).
2. Does the mortgage lender permit it?
A residential mortgage usually needs 'consent to let' before you let your home. Buy-to-let mortgages often restrict company lets, HMOs, short lets, letting to family and commercial use. Breach can let the lender demand repayment; a tenancy granted without the lender's consent may not bind the lender if it repossesses.
3. Does the superior lease permit it?
Leases often restrict subletting, sharing, short lets, business use, pets and alterations, or need the freeholder's consent. Before forfeiting a long residential lease the freeholder normally needs a tribunal or court finding of breach and a section 146 notice.
4. Does the insurance cover it?
For landlord or business insurance you must make a fair presentation of the risk (Insurance Act 2015). For consumer policies you must answer the insurer's questions carefully and honestly (CIDRA 2012). Either way, follow any policy term requiring you to tell them about changes — letting, subletting, short stays, empty periods, business use. Otherwise a claim can be refused or reduced. Get the insurer's agreement in writing.
5. Is planning permission or licensing needed?
Planning and licensing are separate again: HMO licensing, selective licensing, change of use (C4, Article 4, short lets) and building regulations can all apply, whatever your contracts say.
6. What rights will the occupiers get?
If you let without the lender's consent, your tenant may still have rights against you, but the lender may be able to take possession free of the tenancy. Tenants are innocent parties — you are responsible for the breach.
7. Money and tax
Lenders may charge a higher rate or a fee for consent to let, or require a switch to a buy-to-let product. Uninsured losses fall on you.
8. What happens if it goes wrong?
Possible results: the lender demands repayment or repossesses; the freeholder seeks forfeiture or damages; the insurer refuses a claim; the council takes enforcement action.
Questions you'll need to answer
- What exactly will change: who lives there, how it is let, for how long, and is any business run from it?
- What does my mortgage offer and the lender's conditions say about letting?
- Does my lease or the title restrict this?
- What does my insurance policy wording say, and have I told the insurer?
- Do planning or licensing rules apply?
Watch out
- Something can be legal and still breach your mortgage, lease or insurance — check each one separately.
- Lenders and insurers differ — GOV.UK can't tell you what your own contract allows.
- In England, terms banning tenants with children or on benefits no longer have effect in mortgages and superior leases (from 1 May 2026) or in insurance from renewal — but the narrow statutory exceptions still apply.
- Never let a property on a residential mortgage without the lender's consent.
What to ask the professionals
Mortgage broker / lender
- Does my mortgage allow this use, and will you consent in writing?
- Is there a fee or rate change for consent to let?
- Would letting to a relative make the mortgage regulated?
Solicitor
- Does my lease or title restrict this use, and what are the risks of breach?
- Is this term in my contract still enforceable after the Renters' Rights Act?
Insurer
- Is this use covered, and what must I disclose?
- Are there exclusions for sharers, short lets, empty periods or company tenants?
Talk it through, or get a specialist
Wala will ask the questions it needs and go through your answers with you. If you want a professional to look at it, Wala will tell you who to see.
Sources
| Source | Where | Status | In force from | Checked |
|---|---|---|---|---|
| Renters' Rights Act 2025, s36 — terms in superior leases relating to children or benefits status | England | Law in force | 1 May 2026 | 10 Nov 2026 |
| GOV.UK — Rental discrimination under the Renters' Rights Act 2025 | England | Guidance | 1 May 2026 | 10 Nov 2026 |
| Renters' Rights Act 2025, Schedule 6 — existing leases, mortgages and insurance contracts | England | Law in force | 1 May 2026 | 10 Nov 2026 |
| Commonhold and Leasehold Reform Act 2002, s168 — no forfeiture notice before determination of breach | England and Wales | Law in force | — | 10 Nov 2026 |
| Insurance Act 2015 — duty of fair presentation (business insurance) | UK | Law in force | — | 10 Nov 2026 |
| Consumer Insurance (Disclosure and Representations) Act 2012 | UK | Law in force | — | 10 Nov 2026 |
Reviewer status: Not yet reviewed by a solicitor. Mortgage and insurance terms vary by lender and insurer — only your own documents can confirm them.