Renting out a house with a mortgage: is that allowed?

Maybe you will be traveling for a while, or you own several houses.

A shame to leave houses empty, right? Many people, therefore, consider renting out their house. Renting out a house can be very lucrative.

Homeownership usually involves a mortgage. Can you rent out a house if you have a mortgage on it?

We explain what the rules are.

The rules for renting out a home with a mortgage

Renting out a house with a mortgage is the exception rather than the rule. Most mortgage contracts state that the house is intended for private occupation. If something changes in this (such as with rental) you must inform the mortgage lender about this.

The so-called investment mortgages and rental mortgages have already given the homeowner permission to let.

Reasons why more and more lenders do not grant permission

There are several reasons why lenders do not allow rental, namely:

• Tenants are well protected in the Netherlands and cannot simply be evicted. Suppose you can no longer pay your mortgage, the lender is in a difficult situation that they have to get a tenant out. They prefer to avoid this risk.
• Rental often leads to a decrease in the value of your home. You’ve probably heard of tenants who are slack in maintaining their home, or students who make a mess of it. When it comes to a forced sale, the bank sees the risk that a home yields less than before it was rented out.
• The housing shortage for starters. Mortgage lenders and banks have a duty of care and want to prevent many people from having multiple mortgages and “milking out houses”.

However, some people are allowed to rent out their home from the mortgage lender. Often such a home than meets the category ‘intermediate rent’ as described in the tenancy law. Applications of intermediate rental are the “vacancy clause” and the “landlord’s diplomatic clause”.

Good news: the vacancy law offers opportunities

If a home is vacant for a longer period of time, the mortgage lender will grant permission quicker to rent out the home. There are a lot of rules that apply to temporary rental under the vacancy law: that is why we have devoted a separate blog to it.

Note: as soon as you rent out your home, the mortgage interest is no longer deductible.

Are you unable to find a solution, or do you have specific questions about the vacancy law? Stoit will help you without obligation. Get in touch.

You will receive permission more quickly with temporary emigration

Are you going to emigrate temporarily? Even then, banks usually give permission to rent out a home with a “landlord’s diplomatic clause” included in the rental agreement.

Renting out a house remotely is the solution for people who temporarily emigrate. Some advantages are for example:

• Your house does not deteriorate because people are residing in the house.
• You have fewer costs, because you can pay the mortgage and/or other expenses (partly) with the rent.
• It is safer, because having people in your home means there will likely be less opportunity for break-ins or squatters.
• You keep your own home in the Netherlands, so you can simply live in your own home when you return.

Renting out your house yourself from abroad is not that practical. Communicating with tenants from abroad is difficult and there is not much you can do if there are defects in the home.

That is why many landlords engage a company for the management of real estate. A company that has contact with the tenants and takes care of the maintenance of the house.

In collaboration with a rental company you will experience the benefits, but not the burdens of home rental.

Temporary rental in connection with own habitation in the near future

A third form of intermediate rent is for house buyers who will not immediately live there. For example when buying an apartment for when you are older.

The purchased apartment can then be rented out temporarily. When you want to use the apartment yourself, there is an option to cancel the rent due to urgent personal use.

With all three forms of intermediate rental it is very important that this is described very well with an extra clause in the rental agreement. This is in order to demonstrate later that the tenants were well aware of the situation and the intention of the rental.

Buying a house to use for rental

In this blog we have hopefully shown you that it is not so easy to buy a house and use it for rental immediately. As soon as there is a mortgage, fairly strict rules apply.

Do you still want to buy a house and use it for rental? Discuss your plans in advance with your bank so that you are not faced with any surprises. Check out our separate blog about buying and renting a house for more information on this theme. Here we will tell you, for example, what you should pay attention to when buying an investment home, and how you can finance it.

Do you have any questions about renting?

Do you have any questions about renting out a house? Check out our frequently asked questions for landlords. Or contact our customer service.

We are here for you to answer all your questions.