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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 16th October 2020*

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 for a group of buyers known as ‘accidental landlords’.

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What is a consumer buy-to-let mortgage?

A consumer buy-to-let mortgage is 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 regulated by the Financial Conduct Authority (FCA), however, this type of mortgage is regulated like a regular mortgage.

The FCA decided to introduce this new legislation in 2016 in order 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, this will also be classed as consumer buy-to-let.

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

With a clearer understanding of what a consumer buy-to-let is, let’s now take a look at some of the ways they differ to a standard buy-to-let mortgage.

The key difference between the two BTL mortgages is the way they are regulated, so we’ll start there…


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

Consumer protection offers additional protection 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).

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.

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 only three years old, 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.

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 remortgage products.

Will I be eligible for a consumer BTL mortgage?

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.

Can I remortgage to consumer buy-to-let if I have bad credit?

If the lender insists the property is remortgaged onto a buy-to-let and you don’t have the best credit history, your choice of lenders will reduce, but that doesn’t mean getting a consumer buy-to-let mortgage will be impossible.

The mortgages available to you will depend on how bad your credit history is. Some lenders are particularly strict and won’t accept your application if you have anything more than the smallest of issues.

Others are more lenient, and may still approve your application depending on what the adverse credit is (a missed phone bill payment is less severe than a recent bankruptcy or repossession, for example) and how long ago it was registered also plays a part (the older the issue, the better).

Below is a list of credit issues some consumer buy-to-let lenders might be willing to overlook, providing you meet their other eligibility requirements:

  • Low credit score
  • Mortgage Arrears
  • Defaults
  • County Court Judgements (CCJs)
  • Individual Voluntary Arrangements (IVAs)
  • Debt Management Plans (DMPs)
  • Bankruptcy
  • Repossession

It helps to have a good idea of your credit situation to begin with. You can access your credit score for free on all three of the main credit score agencies that lenders will use – CallCredit, Equifax and Experian.

Get your credit rating

What else should I be aware of?

One of the most important things 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. 

Read more about buy-to-let Insurance and landlord insurance or save time and hassle by talking to one of the insurance experts we work with. 

Speak to an expert

The experts we work with are whole-of-market buy to let brokers with access to all the mortgage lenders across the UK. They have the knowledge and the tools to ensure you get the right mortgage at the best available price.

Call 0808 189 2301 or make an enquiry for a free, no-obligation chat. 

Updated: 16th October 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of 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.