fbpx Mortgages and Bad Credit: How to get a mortgage with Bad Credit Read more Chevron
Arrow Arrow
Scroll to top

Consumer Buy-to-Let Mortgages

Get started with a buy-to-let specialist to guide you through consumer buy-to-let mortgages, or read our guide below

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 9, 2021

The buy-to-let (BTL) market has changed considerably in recent years. Tax overhauls, a Stamp Duty increase and changes to lender criteria have meant owning a buy-to-let property is more complex than ever.

One particular change has been the introduction of consumer buy-to-let – a type of regulated borrowing mainly for a group of buyers known as ‘accidental landlords’ and people who want to let a property to members of their family.

What is a consumer buy-to-let mortgage?

A consumer buy-to-let mortgage is a type of mortgage for someone who has become an ‘accidental landlord’ – for example, if you inherited a property or moved in with your partner and rented out your property in the short-term. Buy-to-let mortgages are not regulated by the Financial Conduct Authority (FCA), however, this type of mortgage is regulated like a regular mortgage.

The FCA introduced this new legislation in 2016 to provide greater protection for borrowers who may not have intended to be landlords and, therefore, might be more vulnerable.

If you buy a property to let to a family member or being a landlord isn’t your main occupation, this might also be classed as consumer buy-to-let.

How does consumer buy-to-let differ from standard buy-to-let?

The key differences between these two types of buy-to-let mortgage is who they are aimed at and the way they are regulated. Consumer buy-to-let is largely geared towards accidental landlords and people letting to close family, while standard buy-to-let is aimed at pretty much everyone else who’s looking for an investment property to let to tenants.

Regulation and consumer protection

Consumer buy-to-let mortgages are regulated by the FCA in the same way as residential mortgages.

‘Deliberate’ landlords (i.e. investors who bought the property specifically to run as a buy-to-let investment) don’t need the same level of protection and, as such, are still unregulated.

Consumer protection offers additional safeguarding to customers who have found themselves running a property for income as a mini business, by giving them the protection all FCA regulated contracts offer, including cover by the Financial Services Compensation Scheme (FSCS). This will protect you against bad advice and misselling, among other things.

Who provides consumer buy-to-let mortgages?

Some of the biggest names in buy to let are offering consumer BTL mortgages, alongside several specialist lenders. Providers include Santander, Virgin Money, Clydesdale Bank, Bluestone, Kensington Mortgages and many more. Approaching one of these lenders directly is not recommended, as this means you would only have access to their products and potentially miss out on a better deal elsewhere. Speaking to a mortgage broker who specialises in consumer BTL before you press ahead will give you access to all of the products that you qualify for, along with expert advice.

While the FCA doesn’t regulate this market sector, brokers require supplementary consumer buy-to-let permission to advise on such cases, and the advisors we work with can connect you with the firms that have this. Given the concept is relatively new, we can expect to see more consumer buy-to-let mortgage lenders come to market going forward.

What to do if you become an accidental landlord

The first thing you must do is notify your mortgage lender of your change in circumstances and obtain consent to let your property to tenants. Letting out a property with a residential mortgage will be in breach of the mortgage terms, so it’s vitally important you contact your lender to let them know your plans. Breaching the terms and conditions of your mortgage could give the lender the right to recall the entire debt in one go, and this would make most people default and harm their credit report.

In some cases, the lender may increase your interest rate upon giving you consent to let, or perhaps keep the same deal but charge an admin fee. If your lender does not give you consent to let you’ll have to remortgage onto a consumer buy-to-let product.

If you’ve found yourself in this situation and are still unsure what to do, get in touch and the consumer buy-to-let advisors we work with will assess your case, offer expert insight, and can connect you with lenders who specialise in these mortgage products.

Consumer buy-to-let mortgage eligibility criteria

You should be able to apply for a consumer buy-to-let mortgage if…

  • You did not buy the property in question with the intention to let it out.
  • Renting out property is not your main occupation.
  • You or one of your relatives previously lived there.
  • You don’t own any other rental properties.

Consumer buy-to-let regulations state that you cannot apply for a consumer buy-to-let mortgage if any of the following applies to you…

  • You are buying a new property and plan to let it out.
  • You’re a professional landlord.
  • You already own multiple buy-to-let properties and are letting them out.

Feefo badge

Consumer buy-to-let mortgage eligibility criteria

You should be able to apply for a consumer buy-to-let mortgage if…

  • You did not buy the property in question with the intention to let it out.
  • Renting out property is not your main occupation.
  • You or one of your relatives previously lived there.
  • You don’t own any other rental properties.

Consumer buy-to-let regulations state that you cannot apply for a consumer buy-to-let mortgage if any of the following applies to you…

  • You are buying a new property and plan to let it out.
  • You’re a professional landlord.
  • You already own multiple buy-to-let properties and are letting them out.

Get your credit rating

Insurance for consumer buy-to-let landlords

One of the most important things for consumer buy-to-let landlords to consider is insurance. If you let your property to tenants, your standard home insurance is unlikely to cover it. Your insurer may be able to adapt your policy to cover your new needs, but it’s always advisable to shop around to make sure you’re getting the best deal – and the best standard of cover.

Typical insurance policies that a consumer BTL landlord might need include…

  • Landlords buildings & contents insurance (can be separate policies or combined)
  • Rental protection insurance
  • Public liability insurance
  • Legal expense cover

You can read more about buy-to-let insurance and landlord insurance in our standalone guides through the links we’ve provided, or save time and hassle by talking to one of the insurance experts we work with. They can help you find the cover you need and will search the entire market to make sure you get the best possible deal for it.

Speak to an expert

If you’ve become an ‘accidental landlord’ or want to let a property to family members, a consumer buy-to-let mortgage could be the right option for you, but it pays to seek professional advice before you make that decision. Speaking to the right broker – one who specialises in consumer buy to let mortgages – before you proceed could save you time, money and potential marks on your credit report.

We offer a broker-matching service that will find the right broker and match you with them free of charge. If you’re an accidental landlord, we’ll introduce you to an expert who helps people in the situation every day, and if you’re buying a property to let to a family member, we’ll find you an advisor who specialises in this type of arrangement.

They will offer you expert advice, help you find the best mortgage product for your needs and circumstances and guide you through the application process. Call 0808 189 2301 or make an enquiry for a free, no-obligation chat for you perfect broker today.

Ask us a question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

Ask us a question and we'll get the best expert to help.

1 of 3
£
£
£
2 of 3
3 of 3 Send!

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Maximise your chances of approval whatever your situation. Find the right buy to let mortgage broker

Get the ‘YES’ you’ve been waiting for 👍

Increase your chances of approval with an expert!

Our broker matching service will match you to a real human being who’s a specialist in your circumstances – for free!

Your expert will find you the best deal that’s right for you and be with you every step of the way.

Get Started