News Hong Kong Property & Finance

Rent out owner-occupier flat for 1 month after closing?

ORIGINAL POST
Posted by GW80 13 yrs ago
Hi all,


Wondering if you can help. I recently bought a flat due to complete in mid-July. I'm planning to owner-occupy this place and have received all of my mortgage offers based on self-using it (70% LTV). However, a few days ago, the current landlord asked if I would accommodate the timing of his move out by allowing him to stay 1 more month while he renovated his new home. In return, he would pay a fair market rent for 1 month.


Honestly, I would like to accommodate his request to make things easier for him. It's not a big deal to stay an extra month in my currently living situation. However, I shouldn't be "allowed" to rent it to him (due to my mortgage terms) and I plan to tell him so. However, I just want to double check whether there's a way around this to help him out or not. Appreciate any advice or views on this!


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COMMENTS
OffThePeak 13 yrs ago
Be careful!

It is possible that you may be losing some control of the property, if you allow him to stay after the scheduled completion date. Check with your lawyer.


If it was me, I would tell him it is inconvenient, and that you would want a higher rent for the additional period, to reflect the hassle factor, including the need to discuss matters with your lawyer. (He should have thought of this before he agreed on the sale date - Maybe it would be easier and safer for you to extend the completion date in return for a suitable reduction in price.)


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GW80 13 yrs ago
OffThePeak, thanks for the feedback.


What kind of implication do you mean by "losing some control of the property"? Would the bank call for an extra 20% deposit if they find out about the 1 month rental? That'd cause problems for me.


Agree with you and Duracel about the extended completion date, but turns out he isn't able to push it out 1 month because he "needs the funds". He's a nice guy and don't think there's anything sketchy, but given the feedback, I'm guessing I shouldn't help out and put the mortgage at risk - and I'm pretty sure the lawyer would agree too.


Just curious, any experience with banks strictly following up on new owner-occupier transactions and checking whether the property has been rented out?



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OffThePeak 13 yrs ago
If your lawyer agrees, then you should be okay.

He is in a much better position to assess the risk than I am

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Loyd Grossman is Miss Venezuela 13 yrs ago
I would say a big no. Just say you need the flat.

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GW80 13 yrs ago
Cheers, thanks for all of the responses. Lawyer feedback was a big no as well. Will go ahead and take vacant possession.


For those interested, HSBC, BEA and wing hang all offered effective 2.15% with 1% cash rebate. The only room for negotiating was in the prepayment penalties.


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elsdon 13 yrs ago
GW80,


What was the total loan amount if you don't mind me asking?


Repayment period?

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GW80 13 yrs ago
No prob - total loan amount was approx. $4m. Repayment period 30 years.

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associates 13 yrs ago
You are right typically you are NOT allowed to rent the Property out due to your mortgage terms. You may consider giving the old owner permission or have a joint occupation license for this one month accommodation although no matter what kind of agreement it is named, so long as it can be proved that it is in fact a tenancy created, then it is very likely in breach of the mortgage terms. Also you must make sure that if he is permitted to stay for one month, he should be responsible for the management fee and other outgoing and miscellaneous expenses. In addition IF he decides he doesn’t want to move….then you have the hassle of enforcing an eviction which can be a tiresome and costly exercise. Our recommendation is to make the tenancy terms for the one month tenancy-license WELL above market to encourage him to stay no longer than he has to.


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