Regulated Buy to Let Mortgages, Family and Consumer Buy to Let

What is a regulated buy to let mortgage?

A regulated buy to let mortgage is a loan secured on a property that is let, or lived in by family, that comes within regulation by the Financial Conduct Authority (FCA), either as a regulated mortgage contract because the borrower or a related person will live in at least 40% of it, or as a consumer buy to let mortgage because the borrower is not letting in the course of a business. Most buy to let lending is business lending: it is assessed on the rent, at banks and building societies under the Prudential Regulation Authority's underwriting standards, and it is outside the FCA's mortgage rules. Whether a loan is regulated or business lending decides how it is assessed, on your income or on the rent, which lenders will consider it and what protections you have. If you borrow in your own name, business buy to let is not available for a home your parents or your child will live in, because they are related persons, and a low family rent would rarely pass a commercial rental stress test anyway; the loan can pass a regulated income assessment instead.

The legal test is in the Regulated Activities Order. A loan to an individual secured on property of which at least 40% is used, or is intended to be used, as a dwelling is a regulated mortgage contract unless an exclusion applies; for a loan to trustees, the dwelling has to be used by a beneficiary of the trust or a related person (legislation.gov.uk: Regulated Activities Order, article 61). The exclusion that applies to business buy to let is the investment property loan: a loan entered into wholly or predominantly for a business, where less than 40% of the property is used as a dwelling by the borrower or a related person (legislation.gov.uk: Regulated Activities Order, article 61A). A related person is a spouse or civil partner, a partner living with the borrower as a couple, or a parent, brother, sister, child, grandparent or grandchild. When one of them lives in the property, that exclusion cannot apply, so the mortgage is regulated in the same way as a residential mortgage on your own home, and the lender follows the FCA's conduct rules in MCOB (FCA Handbook: MCOB). This is family buy to let. A loan to a limited company is outside the definition altogether, because it is not credit to an individual or to trustees.

Consumer buy to let is a separate regime. A buy to let mortgage contract, in the legal sense, is one where the property is let under a rental agreement and cannot be lived in by the borrower or a related person. It is consumer buy to let when the borrower does not enter into it wholly or predominantly for a business carried on, or intended to be carried on, by them (legislation.gov.uk: Mortgage Credit Directive Order 2015, article 4). Since 21 March 2016 it has been regulated under Part 3 of that Order, with its own rules on information, creditworthiness and arrears, and not under the full mortgage rules (FCA Handbook: PERG 4.10B). The typical borrower is an accidental landlord: someone who inherited a home, or moved and kept a former home, and owns no other let property. Business buy to let, assessed on the rent under the PRA's SS13/16 framework, is covered in the buy to let mortgage guide and on our buy to let mortgages page.

Mortgage Lane arranges regulated mortgages for parents buying for children, children buying for parents, siblings and grandparents housing relatives, and consumer buy to let for accidental landlords who have inherited a property or cannot sell a former home. Most of the work is establishing which regime a case falls under before choosing a lender, because the regime decides the assessment and your protections. For a first rental bought as an investment, see our page on first time landlord mortgages.

Regulated buy to let mortgage rates

Regulated buy to let mortgage rates are set by each lender, by loan to value band, and the range of products depends on which regime the case falls under. Depending on the lender, family buy to let is priced on its residential or specialist ranges, and consumer buy to let on its buy to let ranges. Not every buy to let lender offers family buy to let, so there can be fewer products at each loan to value band than for standard buy to let. A larger deposit can move a case into a cheaper band, and product fees and early repayment charges vary between lenders in the same way. Our fixed term mortgages page explains how fixed rates are priced.

For family buy to let, the effect on your own borrowing is often a larger cost than the rate. Because the lender assesses the loan on your income, its payments become one of your commitments when you next remortgage or move, which reduces what you can borrow on your own home. The worked example further down puts a figure on that, and the calculator shows it for your own numbers.

Housing a relative, or letting a home you did not plan to let? Get in touch with who will live there, the rent and your income. We confirm which regime applies before choosing a lender.

Regulated buy to let mortgage criteria

Regulated buy to let mortgage criteria start from two facts: who will live in the property and why you are letting it. The table compares the three regimes. The occupant, purpose, assessment, regulation and ombudsman rows rest on published law and rules, as at October 2026. The rent row describes how lenders differ, and each lender's criteria and underwriting decide a case. Every lender also applies its usual checks on the property and your credit history: our page on bad credit buy to let mortgages covers adverse credit on a let property, and residential mortgages covers the checks on a home you live in.

Which regime applies: family, consumer or business buy to let

Two questions decide it: who will live in the property, and why you are letting it.

1. Will you or a related person live in at least 40% of the property? If so, and you are borrowing as an individual or a trustee, it is a regulated mortgage contract: family buy to let.
2. If not, are you letting in the course of a business? An investor buying to let usually is. An accidental landlord letting a former or inherited home usually is not, and the mortgage can be consumer buy to let.
3. Otherwise it is business buy to let, outside FCA mortgage regulation, and the lender may ask you to sign a business purpose declaration.

The law answers the second question for you in two cases. You are treated as borrowing for a business if you bought the property, or are buying it, intending to let it, and neither you nor a related person has lived in it since; or if you own other property that is let and not lived in by you or a related person, or that has its own buy to let mortgage (legislation.gov.uk: Mortgage Credit Directive Order 2015, article 4). So a buyer who has never lived in a property bought to let cannot treat it as consumer buy to let, and a landlord with one existing let is a business borrower on the next. Landlords with four or more mortgaged buy to let properties are portfolio landlords, assessed across the whole portfolio, as our page on portfolio mortgages explains.

The 40% is measured across the property the mortgage secures. Where a relative lives in one part of a larger building, such as a flat above a shop you own, the share of the building used as a home decides the answer, and our page on flat above shop mortgages covers mixed buildings. Where the relative is not a related person, such as an aunt, uncle or cousin, the first question is answered no, and the case is consumer or business buy to let, assessed on the rent.

Family buy to let: letting to family on a regulated mortgage

Family buy to let covers buying, or remortgaging, a home that a parent, child, sibling, grandparent or grandchild will live in. Because it is a regulated mortgage, the lender assesses whether you can afford it from your own income, alongside your own mortgage and other commitments, rather than relying on the rent. The family member may pay a market rent, a reduced rent or nothing, depending on the lender. Common cases are parents buying a flat for a student or working child, and adult children housing elderly parents. If you already own a home, you usually pay the higher rates of Stamp Duty Land Tax in England and Northern Ireland; Wales charges higher rates of Land Transaction Tax, and Scotland adds the Additional Dwelling Supplement.

Who counts as a related person

The list is short and fixed by law: your spouse or civil partner, a person you live with as a couple, and your parent, brother, sister, child, grandparent or grandchild (legislation.gov.uk: Regulated Activities Order, article 61(4)). Aunts, uncles, cousins, nieces, nephews and in-laws are not on it, so a home let to one of them is ordinary buy to let or consumer buy to let, assessed on the rent. Where the borrowers are trustees, the list applies to the relatives of a beneficiary of the trust.

Buying a house for your parents

If you buy a home for elderly parents, you are the borrower and the owner. The lender assesses the loan on your income and outgoings, including your own mortgage, and your parents may pay a market rent, a reduced rent or nothing, depending on the lender. The worked example below follows a £250,000 flat bought this way and shows why the rent alone would not support the loan. Buying your parents' current home from them is a different transaction: our guide to buying a house from family and our page on concessionary purchase mortgages cover it.

Get in touch with your income, your own mortgage, the price and what your parents will pay.

Buying a flat for a child at university

Parents can buy a flat for a child at university with a family buy to let mortgage, assessed on their own income, because a child is a related person. Some buy a larger property and let the other rooms to the child's housemates. Where the child lives there, the mortgage can still be regulated, because the test looks at how much of the property is used as a home by the borrower or a related person, and lenders differ on whether they lend on that arrangement. A property let to three or more people who are not from one household and share facilities such as a kitchen or bathroom is a house in multiple occupation, and in England and Wales one let in this way to five or more people from more than one household needs a licence from the council (GOV.UK: house in multiple occupation licence). Where the child will not live there, the property is an ordinary student let assessed on the rent, covered in our guide to student HMO mortgages.

If the aim is for your child to own a home of their own, that is a different purchase, covered in our pages on gifted deposit mortgages, family help mortgages and JBSP mortgages and in the first-time buyer mortgage guide.

Get in touch with the property, who will live there and what each person will pay.

Rent from family and your own affordability

Lenders differ on rent. Some family buy to let lenders accept a reduced or nil rent because the loan is assessed on your income, others expect some rent, and some count the rent in the affordability assessment. Under MCOB the lender must take full account of your income, your committed expenditure and your household's essential spending, and it must allow for likely rate rises over at least five years unless the rate is fixed for five years or more (FCA Handbook: MCOB 11.6). Your own mortgage and any loans or cards are committed expenditure, so the new loan has to be affordable on top of them. On residential lending, in our experience lenders lend up to 5 times gross income less outgoings, and up to 6 times for professionals and on specialist products. The calculator on this page applies that income multiple to family buy to let, counting your own mortgage payments as a commitment; each lender's own assessment decides the actual figure.

Once the family mortgage is in place it counts against you: when you next remortgage or move, its payments are one of your commitments, which reduces what you can borrow on your own home. A business buy to let assessed on the rent affects personal affordability less, but it is available only where the property is let to someone who is not a related person, so not while your parents or child live there. If the deposit for the family home comes from the equity in your own, our page on how to remortgage to buy a second property covers raising it.

Charging rent also has tax consequences. Rent is taxable property income, and where a property is let at less than a commercial rent, HMRC allows expenses only up to the rent received, while a home lived in rent-free is outside the property income rules altogether (HMRC: Property Income Manual, PIM2130). Mortgage Lane does not give tax advice; an accountant or tax adviser can say how this applies to you.

Remortgaging a family buy to let

You can remortgage a family buy to let with a lender that offers regulated family lending, which assesses it again on your income, or move to a new deal with your existing lender. A product transfer with no extra borrowing and no change material to affordability does not need a new affordability assessment under the FCA's rules (FCA Handbook: MCOB 11.6.3R). If your relative moves out and you let the property to a tenant who is not family, it stops being family buy to let, and a business or consumer buy to let mortgage may become the right product, assessed on the rent.

Get in touch with your current mortgage, its end date and who lives in the property now.

Scotland, Wales and Northern Ireland

The mortgage rules are the same across the UK: the Regulated Activities Order, MCOB and the consumer buy to let regime apply in all four nations. The land tax on a purchase differs, and the rates given here are as at October 2026. England and Northern Ireland charge Stamp Duty Land Tax, with higher rates 5 percentage points above the standard rates for a buyer who will own another home (GOV.UK: buying an additional residential property). Wales charges Land Transaction Tax, with its own higher residential rates (Welsh Government: Land Transaction Tax rates and bands), and Scotland charges Land and Buildings Transaction Tax plus an Additional Dwelling Supplement of 8% of the price. Revenue Scotland counts a property used by family or friends, even without rent, as an additional residential property (Revenue Scotland: Additional Dwelling Supplement). Step 3 of the worked example compares the three on the same home, and our page on mortgages in Scotland goes into LBTT and the supplement in more detail.

Get in touch with where the property is and whether you will keep your own home.

Consumer buy to let for accidental landlords

Consumer buy to let covers people who let a property but are not running a letting business, most often accidental landlords who have inherited a home, or who moved and could not sell their old one. The loan is assessed mainly on the rent, as other buy to let is, but under consumer rules. The lender must make a thorough assessment of your creditworthiness that does not rely mainly on the property's value, taking account of the rent the property can achieve, future rate rises, void periods, arrears and letting costs; it must give you a lending illustration before you commit; and it must show reasonable forbearance before taking possession if you fall behind (legislation.gov.uk: Mortgage Credit Directive Order 2015, Schedule 2). Firms that lend, arrange or advise on consumer buy to let must be registered with the FCA for it (FCA Handbook: PERG 4.10B). Complaints about consumer buy to let business can go to the Financial Ombudsman Service (FCA Handbook: DISP 2.3), which notes that consumer buy to let mortgages have been available to accidental landlords since 21 March 2016 (Financial Ombudsman Service: buy-to-let mortgages).

Letting an inherited property

An inherited home is the clearest consumer buy to let case. You did not buy it to let, so the first business test does not catch it, and if you own no other let property the second does not either. You can then use a consumer buy to let mortgage to raise money against the property or refinance a loan already on it, assessed on the rent. If you already let another property, or you plan to build a letting business, the mortgage is business buy to let instead. The property normally has to be transferred into your name before you can mortgage it; until then, borrowing against it is a matter for the executors, and our page on probate loans covers borrowing by the estate before and after the grant of probate.

Get in touch with the grant of probate or the title, the expected rent and any loan on the property.

Letting a former home you cannot sell, and consent to let

If you move and cannot sell, you can let your old home with your current lender's consent to let or by remortgaging to a consumer buy to let mortgage. You must tell the lender, and have its agreement, before letting a home that has a residential mortgage. MoneyHelper warns that letting without telling the lender could invalidate the mortgage, and that a lender that agrees may charge a higher rate, an annual fee or both (MoneyHelper: buy-to-let mortgages explained). Consent to let keeps the existing mortgage in place and can be quicker than a remortgage, but some lenders decline it. A former home you lived in passes the first business test, so it is consumer buy to let if you own no other let property. If you are buying your next home at the same time, our page on let to buy mortgages explains how the two applications fit together, and our accidental landlord mortgage guide covers the move from consent to let to a buy to let product.

Get in touch with your current mortgage terms, the expected rent and your plans for the next home.

The business purpose declaration

A business purpose declaration is a statement you sign as part of a buy to let mortgage agreement. It says that you are borrowing wholly or predominantly for a business you carry on or intend to carry on, that you understand you will not have the protections of the consumer buy to let regime, and that you should take independent legal advice if you are in doubt. Once it is signed, the agreement is presumed to be business lending unless the lender knows or has reasonable cause to suspect otherwise (legislation.gov.uk: Mortgage Credit Directive Order 2015, article 4). The Regulated Activities Order uses the same mechanism for its business exclusions, including the investment property loan. Some lenders ask every buy to let borrower to sign one, including existing landlords who are already treated as business borrowers. Before signing, check that it describes your position, because it decides which regime and protections apply.

How a regulated buy to let mortgage is arranged

1. Regime identified. Who will live in the property and whether they are a related person; whether you or they will use at least 40% of it as a home; whether you bought it to let and whether you own other let property.
2. Assessment basis. Your income and outgoings for family buy to let, including the mortgage on your own home; the rent, rate rises, voids and letting costs for consumer buy to let.
3. Lender selected. Lenders that offer family buy to let, or that are registered for consumer buy to let, compared on their rules on rent from family, their loan to value limits and their pricing.
4. Application. An agreement in principle, then the full application with the occupant's details or the tenancy, your income evidence and the property; the lender's valuation and its decision.
5. Offer and completion. The mortgage offer and completion, with Stamp Duty Land Tax or Land Transaction Tax paid at any higher rates for an additional home, or LBTT with any Additional Dwelling Supplement.

Buying a flat for your parents: the arithmetic

An illustrative homeowner buys a £250,000 flat for their retired parents, with a 25% deposit and a £187,500 loan. The parents will pay £400 a month towards it. The figures are hypothetical and are not a product or an offer.

Step 1. The rental test

Business buy to let is not available while the parents live in the flat, because they are related persons, so this test is shown only for comparison. On a property let to someone who is not a related person, the lender would check that the £400 a month, £4,800 a year, covers the mortgage interest at a stressed rate by a set margin, its interest cover ratio. Banks and building societies assume at least 5.5% over the first five years unless the rate is fixed for five years or more (Bank of England: SS13/16 underwriting standards for buy-to-let). On the cases we arrange, lenders commonly test two-year fixes at 5.5% and five-year fixes at 4.5%, with 125% rent cover for companies and basic-rate taxpayers and 145% for higher-rate taxpayers. The table shows the loan £400 a month supports on each reading.

Even if the test applied, the rent would support less than half the loan on every reading. At 125% cover and 5.5%, £400 a month supports £69,818, and the loan would need rent of about £1,074.22 a month to pass. A higher-rate taxpayer borrowing in their own name would face the 145% rows.

Step 2. The regulated income assessment

As family buy to let, the same loan is assessed on the buyer's income instead. Suppose the buyer earns £70,000 a year and pays £900 a month on the mortgage on their own home, with no other credit. Using the method in our calculator, a year of those payments comes off the income before the multiple, and 5 times is the standard multiple in Mortgage Lane's experience.

On these figures the income supports the loan that the rent could not, with £108,500 to spare, and an income of £48,300 with the same mortgage would be enough at 5 times. The real figure comes from each lender's own assessment under MCOB, including household spending and the rate rise it must allow for, and some lenders also count the £400 the parents pay.

Step 3. Stamp duty, and the effect on your own borrowing

Because the buyer already owns a home, the purchase pays the higher rates for an additional home. In England and Northern Ireland that is 5% on the first £125,000 and 7% on the next £125,000, £15,000 in all as at October 2026, against £2,500 at the standard rates (GOV.UK: Stamp Duty Land Tax residential rates). The table compares the same home, at the rates as at October 2026, in Wales, where the higher rates of Land Transaction Tax are 5% up to £180,000 and 8.5% from there to £250,000, and in Scotland, where LBTT is nil up to £145,000 and 2% from there to £250,000 before the 8% supplement (Revenue Scotland: LBTT residential rates).

The tax is paid in cash on top of the £62,500 deposit. The second cost is ongoing. At 5.2% over 30 years, the illustrative rate used across our guides and not a product rate, the £187,500 loan costs £1,029.58 a month. Because the regulated route counts the family loan against the buyer's own affordability, that payment becomes one of their commitments, and at 5 times it takes £61,774 off what their income would support on another mortgage, such as a remortgage of their own home or a move.

What decides the case

Identify the regime first. If family will live there, use regulated family buy to let assessed on your income, and check what it does to your own borrowing before you commit; if you are an accidental landlord with no other let property, consumer buy to let; otherwise business buy to let on the rent. After that, your income and existing mortgage, the rent the family pays and the land tax for the nation where the property is decide the numbers.