Have Most landlords don’t set out to be landlords. They inherit a property, move in with a partner and hold on to their old flat, or get relocated for work and decide to let rather than sell. If that sounds familiar, a consumer buy to let mortgage is almost certainly what you need. It’s also a very different product from the standard buy to let mortgage most people have heard of.
This guide explains what a consumer buy to let mortgage is, how it differs from a standard buy to let mortgage, what the FCA regulation means for you in practice, and how to get the right deal for your circumstances.
What is a consumer buy to let mortgage?
A consumer buy to let mortgage is a regulated mortgage product designed for ‘accidental landlords’. This means people who are letting out a property they previously lived in, or that a family member has lived in, rather than buying a property specifically to rent out.
The key distinction is intent. If you bought a property to invest in and rent from day one, that’s a standard buy to let. If you originally bought the property to live in (or inherited it, or moved out due to a change in circumstances), you need a consumer buy to let mortgage instead.
Common situations that trigger the need for a consumer buy to let mortgage include:
- Inheriting a property and deciding to let it rather than sell
- Moving in with a partner and renting out your existing home
- Relocating for work but not wanting to sell your property
- Being unable to sell and choosing to rent out temporarily
- A relationship breakdown where one partner moves out but keeps part-ownership
Consumer buy to let vs standard buy to let: what’s the difference?
This distinction matters a great deal, both for which lenders will accept your application and how you’re protected as a borrower.
Standard buy to let mortgage
Standard buy to let mortgages are unregulated by the FCA. They’re treated as a business or investment transaction. Lenders focus heavily on rental yield and stress-test rates, and affordability checks are based primarily on projected rental income (typically requiring rent to cover 125–145% of the interest payment at a stressed rate of around 5–6%).
Consumer buy to let mortgage
Consumer buy to let mortgages are regulated by the Financial Conduct Authority (FCA) under the Mortgage Credit Directive. This means:
- Lenders must carry out affordability checks based on your personal income, not just rental yield
- You have stronger consumer protections if things go wrong
- The lender has a duty to ensure the mortgage is genuinely suitable for your situation
- You have access to the Financial Ombudsman Service if you have a complaint
In practice, this means the application process feels more like applying for a residential mortgage than a standard buy to let.
Who qualifies for a consumer buy to let mortgage?
To qualify for a consumer buy to let mortgage, you generally need to meet all three of the following criteria:
- You, or a close family member, have previously lived in the property
- You did not buy the property with the original intention of renting it out
- You now want to let the property, either short-term or long-term
If you’re renting the property to a close family member (such as a parent, sibling, or adult child), this falls under what’s known as a ‘regulated buy to let’ rather than a consumer buy to let, although both are FCA regulated. The terminology can be confusing, so it’s worth speaking to a specialist broker who can confirm which product applies to your situation.
How does a consumer buy to let mortgage work?
Consumer buy to let mortgages operate similarly to other mortgage types in terms of structure, but the assessment criteria differ in important ways.
Affordability checks
Because these mortgages are regulated, lenders must assess your personal income and outgoings, not just the expected rental income. That said, rental income will still be considered as part of the overall picture. Lenders will want to see that the rent covers the mortgage interest, typically at a stressed rate, and that you can manage the mortgage from your own income if the property sits empty.
Deposits
You’ll typically need a deposit of 20–25% of the property’s current value, similar to a standard buy to let. If you’ve been living in the property and have built up equity, that equity can often be used as your deposit, which makes the transition more straightforward.
Interest rates
Consumer buy to let mortgage rates are generally slightly higher than residential rates, but can be competitive compared to standard buy to let products depending on the lender and your loan-to-value ratio. Rates vary considerably between lenders, which is one reason working with a specialist broker makes a real difference.
Repayment vs interest-only
Both options are available. Many landlords opt for interest-only to keep monthly costs lower, using rental income to cover the payments while the property appreciates in value. A repayment mortgage reduces the outstanding balance over time. Your choice will depend on your long-term plans for the property.
How many lenders offer consumer buy to let mortgages?
Fewer lenders offer consumer buy to let mortgages than standard buy to let products, as it’s a more specialist area of the market. Lenders who do offer them include a mix of high street banks and specialist buy to let lenders, though availability and criteria vary significantly.
This is one of the most important reasons to use a whole-of-market mortgage broker. Many consumer buy to let lenders don’t offer products directly to the public, meaning you’ll only access their deals through a broker. Going direct to your existing bank may mean missing out on significantly better rates.
Benefits of a consumer buy to let mortgage
FCA regulation provides meaningful protection
Unlike standard buy to let, you’re covered by the same regulatory framework as residential mortgage borrowers. If a lender mis-sells you a product, or doesn’t carry out proper affordability checks, you have recourse through the Financial Ombudsman Service. This matters especially if you’re new to being a landlord and less experienced at navigating the market.
Retains ownership without forcing a sale
In a slow or falling market, being forced to sell can mean accepting a significant loss. A consumer buy to let mortgage gives you the flexibility to let the property and wait for the right time to sell, or to hold it as a long-term asset.
Rental income covers costs
For many accidental landlords, rental income covers the mortgage payment entirely, meaning the property is effectively self-funding while they live elsewhere. Any surplus above the mortgage payment is profit, though you’ll need to account for landlord costs including insurance, maintenance, and potentially letting agent fees.
Potential long-term capital growth
Holding the property rather than selling means you continue to benefit from any increase in property value over time. Combined with rental income, this can make a significant difference to your long-term financial position.
Potential drawbacks to be aware of
- Not all lenders offer consumer buy to let products, so choice is more limited than standard buy to let
- You’ll take on landlord responsibilities including legal compliance, maintenance and dealing with tenants, even if you didn’t plan to
- Tax treatment of rental income has become more complex in recent years, particularly following changes to mortgage interest tax relief for higher-rate taxpayers
- If the property sits empty between tenants, you’re still liable for the mortgage payment
- You’ll need landlord insurance, an EPC rating of E or above, a gas safety certificate, and compliance with various letting regulations
Tax considerations for accidental landlords
It’s worth being aware of the tax implications before you proceed. Rental income is taxable and must be declared to HMRC. Since April 2020, mortgage interest relief for residential landlords has been replaced by a 20% tax credit, which affects higher and additional-rate taxpayers more significantly than basic-rate taxpayers.
Capital gains tax will also apply when you eventually sell the property, though Private Residence Relief may reduce your liability depending on how long you lived there and when you moved out.
We’d always recommend speaking to an accountant who specialises in property before committing to letting, as the tax position can vary significantly depending on your overall income and circumstances.
How to apply for a consumer buy to let mortgage
Step 1: Speak to a specialist mortgage broker
Consumer buy to let is a niche area and not something every mortgage adviser deals with regularly. A specialist whole-of-market broker can identify which lenders are most likely to accept your application, access exclusive products not available directly, and guide you through the regulated process.
Step 2: Gather your documents
You’ll typically need proof of income (payslips or tax returns if self-employed), bank statements, proof of your current address, details of the property including current estimated value, and a rental valuation from a local letting agent.
Step 3: Get a rental valuation
Most lenders will want to see an independent rental valuation confirming the expected monthly rental income. Your broker can advise on whether the rental yield is sufficient for the lenders they’re recommending.
Step 4: Mortgage offer and legal work
Once your application is approved, you’ll receive a mortgage offer. A solicitor will handle the legal aspects of remortgaging the property to the new product.
Ready to explore your options?
If you’ve found yourself an accidental landlord and aren’t sure where to start, our mortgage advisers specialise in exactly this situation. We’re a whole-of-market broker with access to lenders who aren’t available on the high street, and we’ll give you straightforward advice based on your actual circumstances rather than a one-size-fits-all recommendation.
Get in touch with Mortgage Saving Experts today for a no-obligation conversation about your consumer buy to let options.
Frequently asked questions about consumer by to let mortgages
Can I convert my residential mortgage to a consumer buy to let?
Yes, this is one of the most common scenarios. If you want to move out of your home and rent it out, you’ll need to either remortgage onto a consumer buy to let product or get ‘consent to let’ from your existing lender. Consent to let is a temporary arrangement that some lenders offer, but it’s not available from all lenders and may come with conditions. A full remortgage onto a consumer buy to let is usually the more secure long-term option.
What happens if I don’t tell my residential lender I’m renting out?
Letting a property on a residential mortgage without permission is a breach of your mortgage terms and conditions. In serious cases, lenders can demand immediate repayment of the outstanding balance. It’s not a risk worth taking.
Can I get a consumer buy to let mortgage if I have bad credit?
It’s more difficult, but not necessarily impossible. Some specialist lenders will consider applications with adverse credit history, depending on the nature and age of the credit issues. This is another area where a specialist broker adds real value, as they’ll know which lenders are most likely to consider your application.
Is a consumer buy to let mortgage right for me if I want to build a portfolio?
No. If you’re actively looking to purchase additional properties as investments, a standard buy to let mortgage is the appropriate product. Consumer buy to let is specifically for the property you previously lived in.
Your home may be repossessed if you do not maintain payments on any mortgage or loan secured on it.
These are lifetime mortgages; to understand the features and risks ask for a personalised illustration
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