---
title: "Regulated Buy to Let Mortgages, Family and Consumer Buy to Let"
description: "Regulated buy to let: letting to family assessed on your income, consumer buy to let for accidental landlords, and how both differ from business buy to let."
url: "https://mortgagelane.com/mortgages/regulated-buy-to-let-mortgages"
site: "Mortgage Lane"
collection: "mortgages"
date: "2026-10-08"
author: "Joseph Lane"
category: "Mortgages"
reviewed: "2026-10-12"
reading_time: "36 min"
byline: "Joseph Lane"
author_credentials: "CeMAP · FCA authorised firm"
language: "en-GB"
robots: "index,follow"
---

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

Regulated buy to let: letting to family assessed on your income, consumer buy to let for accidental landlords, and how both differ from business buy to let.

Regulated buy to let: letting to family assessed on your income, consumer buy to let for accidental landlords, and how both differ from business buy to let.

[Regulated mortgage](https://mortgagelane.com/definitions?term=regulated-mortgage)

Regulation

A mortgage contract that falls within the UK statutory definition of a regulated mortgage contract and the applicable FCA rules.

[Read the full definition of Regulated mortgage](https://mortgagelane.com/definitions?term=regulated-mortgage)

## Expert advice on regulated buy to let mortgages

Speak to a Mortgage Lane adviser about your options.

## In short

A regulated buy to let mortgage is a loan on a property you let that comes within FCA regulation, either because a close relative will live there or because you are letting as a consumer, such as an accidental landlord, rather than as a business. Family buy to let is assessed on your own income like a residential mortgage, while consumer buy to let is assessed mainly on the rent with added consumer protections.

## 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](https://mortgagelane.com/definitions#def-financial-conduct-authority) (FCA), either as a [regulated mortgage contract](https://mortgagelane.com/definitions#def-regulated-mortgage) because the borrower or a [related person](https://mortgagelane.com/definitions#def-related-person) will live in at least 40% of it, or as a [consumer buy to let mortgage](https://mortgagelane.com/definitions#def-consumer-buy-to-let-mortgage) because the borrower is not letting in the course of a business.** Most [buy to let](https://mortgagelane.com/definitions#def-buy-to-let-mortgage) lending is business lending: it is assessed on the rent, at banks and building societies under the [Prudential Regulation Authority](https://mortgagelane.com/definitions#def-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](https://mortgagelane.com/definitions#def-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](https://www.legislation.gov.uk/uksi/2001/544/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](https://www.legislation.gov.uk/uksi/2001/544/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](https://mortgagelane.com/definitions#def-residential-mortgage) on your own home, and the lender follows the FCA's conduct rules in [MCOB](https://mortgagelane.com/definitions#def-mcob) ([FCA Handbook: MCOB](https://www.handbook.fca.org.uk/handbook/MCOB/)). This is [family buy to let](https://mortgagelane.com/definitions#def-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](https://www.legislation.gov.uk/uksi/2015/910/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](https://www.handbook.fca.org.uk/handbook/PERG/4/10B.html)). 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](https://mortgagelane.com/definitions#def-supervisory-statement-ss13-16) framework, is covered in the [buy to let mortgage guide](https://mortgagelane.com/guides/buy-to-let-mortgage-guide) and on our [buy to let mortgages](https://mortgagelane.com/mortgages/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](https://mortgagelane.com/mortgages/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](https://mortgagelane.com/definitions#def-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](https://mortgagelane.com/mortgages/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](https://mortgagelane.com/mortgages/bad-credit-buy-to-let-mortgages) covers adverse credit on a let property, and [residential mortgages](https://mortgagelane.com/mortgages/residential-property-mortgages) covers the checks on a home you live in.

## Regulated buy to let mortgage criteria

*Regulated buy to let mortgage criteria*

| Criterion | Family buy to let (regulated) | Consumer buy to let | Business buy to let |
| --- | --- | --- | --- |
| Who lives in the property | A related person, using at least 40% of it as a home | A tenant who is not the borrower or a related person | A tenant who is not the borrower or a related person |
| Why the borrower is letting | Not part of the test | Not wholly or predominantly for a business | Wholly or predominantly for a business, including any borrower who bought to let or owns other let property |
| How the loan is assessed | Your income and outgoings under the FCA's MCOB affordability rules, including your own mortgage | A creditworthiness assessment taking account of the rent, rate rises, voids and letting costs | An interest cover test on the rent; banks and building societies follow the PRA's SS13/16 |
| Rent | Some lenders accept a reduced or nil rent and some count the rent; lenders set their own rules | Market rent, assessed by the lender | Market rent, assessed by the lender |
| Typical borrower | A parent, child, sibling or grandparent housing family | An accidental landlord with an inherited or former home | An investor landlord |
| Regulation | Regulated mortgage contract under the FCA's mortgage rules | Consumer buy to let regime, Part 3 of the Mortgage Credit Directive Order 2015 | Not regulated by the FCA |
| Financial Ombudsman Service | Yes | Yes | Limited: against an FCA-regulated lender if the landlord meets the ombudsman's small business criteria; brokers only in limited cases |

The occupant, purpose, assessment, regulation and ombudsman rows are from the Regulated Activities Order (articles 61 and 61A), the Mortgage Credit Directive Order 2015 (article 4 and Schedule 2), the FCA Handbook (MCOB 11.6, PERG 4.10B and DISP 2), the PRA's SS13/16 and the Financial Ombudsman Service, checked 8 October 2026. The rent row describes how lenders vary; each lender's criteria and underwriting decide a case.

## 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](https://mortgagelane.com/definitions#def-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](https://www.legislation.gov.uk/uksi/2015/910/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](https://mortgagelane.com/definitions#def-portfolio-landlord), assessed across the whole portfolio, as our page on [portfolio mortgages](https://mortgagelane.com/mortgages/property-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](https://mortgagelane.com/mortgages/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.

A home for an aunt, uncle, cousin, niece, nephew or in-law is not family buy to let, because none of them is a related person in law; the loan is assessed on the rent as consumer or business buy to let.

## 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](https://mortgagelane.com/definitions#def-stamp-duty-land-tax) in England and Northern Ireland; Wales charges higher rates of [Land Transaction Tax](https://mortgagelane.com/definitions#def-land-transaction-tax), and Scotland adds the [Additional Dwelling Supplement](https://mortgagelane.com/definitions#def-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)](https://www.legislation.gov.uk/uksi/2001/544/article/61)). 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](https://mortgagelane.com/guides/residential/buying-a-house-from-family) and our page on [concessionary purchase mortgages](https://mortgagelane.com/mortgages/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](https://mortgagelane.com/definitions#def-hmo), 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](https://www.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](https://mortgagelane.com/guides/hmo-mortgages/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](https://mortgagelane.com/mortgages/gifted-deposit-mortgages), [family help mortgages](https://mortgagelane.com/mortgages/family-help-mortgages) and [JBSP mortgages](https://mortgagelane.com/mortgages/jbsp-mortgages) and in the [first-time buyer mortgage guide](https://mortgagelane.com/guides/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](https://mortgagelane.com/definitions#def-affordability) assessment. Under MCOB the lender must take full account of your income, your [committed expenditure](https://mortgagelane.com/definitions#def-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](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). 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](https://mortgagelane.com/definitions#def-loan-to-income) 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](https://mortgagelane.com/mortgages/remortgage-to-buy-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](https://www.gov.uk/hmrc-internal-manuals/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](https://mortgagelane.com/definitions#def-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](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). 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](https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property)). Wales charges Land Transaction Tax, with its own higher residential rates ([Welsh Government: Land Transaction Tax rates and bands](https://www.gov.wales/land-transaction-tax-rates-and-bands)), and Scotland charges [Land and Buildings Transaction Tax](https://mortgagelane.com/definitions#def-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](https://revenue.scot/taxes/land-buildings-transaction-tax/additional-dwelling-supplement-ads)). Step 3 of the worked example compares the three on the same home, and our page on [mortgages in Scotland](https://mortgagelane.com/mortgages/mortgages-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](https://www.legislation.gov.uk/uksi/2015/910/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](https://www.handbook.fca.org.uk/handbook/PERG/4/10B.html)). Complaints about consumer buy to let business can go to the [Financial Ombudsman Service](https://mortgagelane.com/definitions#def-financial-ombudsman-service) ([FCA Handbook: DISP 2.3](https://www.handbook.fca.org.uk/handbook/DISP/2/3.html)), 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](https://www.financial-ombudsman.org.uk/consumers/complaints-can-help/mortgages/buy-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](https://mortgagelane.com/mortgages/probate-loans) covers borrowing by the estate before and after the [grant of probate](https://mortgagelane.com/definitions#def-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](https://mortgagelane.com/definitions#def-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](https://www.moneyhelper.org.uk/en/blog/buy-or-rent-a-home/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](https://mortgagelane.com/mortgages/let-to-buy-mortgages) explains how the two applications fit together, and our [accidental landlord mortgage](https://mortgagelane.com/guides/buy-to-let-mortgage-guide/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](https://www.legislation.gov.uk/uksi/2015/910/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.

Once a borrower signs a business purpose declaration, the buy to let is presumed to be business lending, without the consumer buy to let protections, unless the lender knows or has reasonable cause to suspect otherwise.

## 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](https://mortgagelane.com/definitions#def-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](https://mortgagelane.com/definitions#def-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](https://mortgagelane.com/definitions#def-interest-coverage-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](https://www.bankofengland.co.uk/prudential-regulation/publication/2016/underwriting-standards-for-buy-to-let-mortgage-contracts-ss)). 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.

## Step 1 figures: the loan £400 a month supports on a rental test

*Step 1 figures: the loan £400 a month supports on a rental test*

| Rent cover | Stress rate | Loan the rent supports | Shortfall against the £187,500 needed |
| --- | --- | --- | --- |
| 125% | 5.5% (two-year fix) | £69,818 | £117,682 |
| 145% | 5.5% (two-year fix) | £60,188 | £127,312 |
| 125% | 4.5% (five-year fix) | £85,333 | £102,167 |
| 145% | 4.5% (five-year fix) | £73,563 | £113,937 |

Shown for comparison only: business buy to let is not available while a related person lives in the property. Illustrative arithmetic on hypothetical figures, worked with the calculator on this page: £4,800 a year of rent divided by the rent cover times the stress rate, rounded down. 125% and 145% cover and the 5.5% and 4.5% stress rates are what we commonly see on the cases we arrange, not lender terms; 5.5% is also the PRA's minimum for banks and building societies over the first five years unless the rate is fixed for five years or more (SS13/16, checked 8 October 2026). Not an offer of finance.

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.

## Step 2 figures: the income assessment at 5 times

*Step 2 figures: the income assessment at 5 times*

| Item | Figure |
| --- | --- |
| Gross annual income | £70,000 |
| Payments on your own mortgage over a year (12 times £900) | £10,800 |
| Income after commitments | £59,200 |
| Maximum loan at 5 times | £296,000 |
| Loan needed | £187,500 |
| Headroom | £108,500 |
| Gross income needed for £187,500 with the same mortgage | £48,300 |

Illustrative arithmetic on hypothetical figures, worked with the calculator on this page. 5 times is the standard multiple in Mortgage Lane's experience, not a lender term, and a year of payments is taken off the income before the multiple, the method our calculators use. Each lender's own affordability assessment under MCOB 11.6 decides the actual figure. Not an offer of finance.

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](https://www.gov.uk/stamp-duty-land-tax/residential-property-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](https://revenue.scot/taxes/land-buildings-transaction-tax/residential-property)).

## Step 3 figures: land tax on a £250,000 home for family, by nation

*Step 3 figures: land tax on a £250,000 home for family, by nation*

| Nation and tax | At the standard rates | At the rates for an additional home | Extra for owning another home |
| --- | --- | --- | --- |
| England and Northern Ireland: Stamp Duty Land Tax | £2,500 | £15,000 | £12,500 |
| Wales: Land Transaction Tax | £1,500 | £14,950 | £13,450 |
| Scotland: LBTT and Additional Dwelling Supplement | £2,100 | £22,100 | £20,000 |

Worked on the published rates checked 8 October 2026: Stamp Duty Land Tax from GOV.UK (rates from 1 April 2025), Land Transaction Tax from the Welsh Government (higher rates from 11 December 2024), and LBTT and the 8% Additional Dwelling Supplement from Revenue Scotland (8% from 5 December 2024). The England and Northern Ireland row is also worked by the calculator on this page. No reliefs and no non-resident surcharge. Not tax advice.

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.

## Related topics

- [2026](https://mortgagelane.com/mortgages/bad-credit-buy-to-let-mortgages)Mortgage[Bad Credit Buy to Let Mortgages, Defaults, CCJs and Arrears](https://mortgagelane.com/mortgages/bad-credit-buy-to-let-mortgages)Bad credit buy to let mortgages: how defaults, CCJs, missed payments and insolvency change the lender, deposit and rate for personal and company landlords.[Read more about Bad Credit Buy to Let Mortgages, Defaults, CCJs and Arrears](https://mortgagelane.com/mortgages/bad-credit-buy-to-let-mortgages)
- [2026](https://mortgagelane.com/mortgages/first-time-landlord-mortgages)Mortgage[First Time Landlord Mortgages, Your First Buy to Let](https://mortgagelane.com/mortgages/first-time-landlord-mortgages)First time landlord mortgages: how the rental stress test sets your loan, why your tax band matters, stamp duty, company ownership and the Renters' Rights Act.[Read more about First Time Landlord Mortgages, Your First Buy to Let](https://mortgagelane.com/mortgages/first-time-landlord-mortgages)
- [2026](https://mortgagelane.com/guides/buy-to-let-mortgage-guide)Guide[Buy to Let Mortgage Guide](https://mortgagelane.com/guides/buy-to-let-mortgage-guide)The complete buy to let guide: ICR stress testing with worked examples, limited company vs personal ownership, portfolio rules, valuations, tax mechanics, and every specialist scenario linked.[Read more about Buy to Let Mortgage Guide](https://mortgagelane.com/guides/buy-to-let-mortgage-guide)

## More topics in this series

## Family buy to let calculator

The calculator works out what your income supports on a regulated family buy to let, the Stamp Duty Land Tax and the monthly payment, and, for comparison only, what the rent would support on a business rental test, which is not available while a related person lives in the property. The starting figures are the illustration on this page: a £250,000 flat with a 25% deposit, £400 a month from the parents, £70,000 of income and £900 a month on your own mortgage. Enter your own figures, and move your income to see where the family route stops working.

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Indicative estimate only, subject to lender criteria, affordability and valuation. The income test takes a year of your mortgage and credit payments off your income before the multiple, lenders differ on whether they count rent from family, the rental test uses the cover ratio and stress rate you enter, and Stamp Duty Land Tax uses the published rates for England and Northern Ireland as at October 2026, without reliefs. This is not tax advice. This is not a mortgage offer. Your home or property may be repossessed if you do not keep up repayments on your mortgage.

## Frequently asked questions about regulated buy to let mortgages

**Q: What is a regulated buy to let mortgage?**

faq-id: what-is-a-regulated-buy-to-let-mortgage

A regulated buy to let mortgage is a mortgage on a property that is let, or lived in by family, that comes within Financial Conduct Authority (FCA) regulation instead of being business lending. There are two kinds. Where a close relative such as a parent, child or sibling will live in the property, it is a regulated mortgage contract, assessed on your income under the FCA's mortgage rules. Where you let to a tenant but are not acting as a business, for example as an accidental landlord letting an inherited or former home, it is consumer buy to let, which has its own, lighter regime under the Mortgage Credit Directive Order 2015. Most other buy to let is business lending outside FCA mortgage regulation.

**Q: Can I buy a house for my parents with a mortgage?**

faq-id: can-i-buy-a-house-for-my-parents-with-a-mortgage

Yes, you can buy a house for your parents with a regulated family buy to let mortgage, assessed on your own income and outgoings, including the mortgage on your own home. Because a parent is a related person under the law, the loan is a regulated mortgage contract rather than ordinary buy to let, so a low rent does not rule it out as it would on a rental test. Your parents may pay a market rent, a reduced rent or nothing, depending on the lender. If you already own a home you will usually pay the higher rates of Stamp Duty Land Tax, or the equivalent in Wales or Scotland, and the new mortgage counts against what you can borrow on your own home in future.

**Q: What is a family buy to let mortgage?**

faq-id: what-is-a-family-buy-to-let-mortgage

A family buy to let mortgage is a mortgage on a home that a close relative will live in: a parent, child, brother, sister, grandparent or grandchild, or a spouse, civil partner or partner. Because a related person lives in the property, the law treats it as a regulated mortgage contract, not as business buy to let. The lender assesses it on your income and outgoings under the Financial Conduct Authority's mortgage rules rather than on the rent. This applies whether or not the relative pays rent. Some lenders accept a reduced or nil rent, others expect some rent, and lenders set their own rules on how they treat it.

**Q: What is the difference between regulated and unregulated buy to let?**

faq-id: what-is-the-difference-between-regulated-and-unregulated-buy-to-let

The difference is how the loan is assessed and what protection you have. Regulated family buy to let is assessed on your income and outgoings under the Financial Conduct Authority's (FCA) mortgage rules, like a mortgage on your own home. Consumer buy to let, for accidental landlords, is assessed mainly on the rent but under consumer rules on information, creditworthiness and treatment in arrears, and complaints can go to the Financial Ombudsman Service. Unregulated, or business, buy to let is assessed on the rent, at banks and building societies under the Prudential Regulation Authority's (PRA) underwriting standards, without FCA mortgage rules, and a landlord can complain to the ombudsman about a lender only if they meet its small business criteria.

**Q: What is a consumer buy to let mortgage?**

faq-id: what-is-a-consumer-buy-to-let-mortgage

A consumer buy to let mortgage is a buy to let mortgage taken by someone who is not letting wholly or predominantly as a business, such as an accidental landlord who inherited a home or could not sell a former home. It has its own regime under Part 3 of the Mortgage Credit Directive Order 2015, with rules on information, creditworthiness and arrears and with firms registered with the Financial Conduct Authority, but it is not a regulated mortgage under the full mortgage rules. You are treated as a business borrower, and fall outside the regime, if you bought the property to let and have not lived in it, or already own other let property ([legislation.gov.uk: Mortgage Credit Directive Order 2015, article 4](https://www.legislation.gov.uk/uksi/2015/910/article/4)).

**Q: Who counts as a related person?**

faq-id: who-counts-as-a-related-person

A related person is your spouse or civil partner, a person you live with as a couple, or your parent, brother, sister, child, grandparent or grandchild. The list is in article 61 of the Regulated Activities Order, and it decides whether a mortgage on a home a relative lives in is regulated ([legislation.gov.uk: Regulated Activities Order, article 61](https://www.legislation.gov.uk/uksi/2001/544/article/61)). 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.

**Q: How is family buy to let assessed?**

faq-id: how-is-family-buy-to-let-assessed

Family buy to let is assessed on your income and outgoings under the Financial Conduct Authority's affordability rules for regulated mortgages, rather than on a rental stress test. The lender must take full account of your income, your committed expenditure, including the mortgage on your own home and any loans or cards, and your household's essential spending, and 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](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). Some lenders also take account of the rent your relative pays. 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.

**Q: Can I buy a flat for my child at university?**

faq-id: can-i-buy-a-flat-for-my-child-at-university

Yes, parents can buy a flat for a child at university with a family buy to let mortgage, assessed on their income, because a child is a related person. Some let rooms to the child's housemates. If the child lives there, the mortgage can still be regulated, because the test looks at how much of the property the borrower or a related person uses as a home, and lenders differ on whether they lend on it. 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, with its own licensing and lender rules. If the child will not live there, it is an ordinary student let assessed on the rent.

**Q: Does family buy to let affect how much I can borrow on my home?**

faq-id: does-family-buy-to-let-affect-how-much-i-can-borrow-on-my-home

Yes. Because the lender assesses family buy to let on your income, it counts in your own affordability and reduces how much you can borrow on your home now or in future. When you next remortgage or move, the family mortgage's payments are one of your commitments. For example, a £187,500 loan at an illustrative 5.2% over 30 years, not a product rate, costs £1,029.58 a month, and at 5 times income that takes £61,774 off what the same income would support on another mortgage. A business buy to let assessed on rent affects personal affordability less, but it is available only where the property is let to someone who is not a related person, not for a home your parents or child live in.

**Q: Do I have to charge my family rent?**

faq-id: do-i-have-to-charge-my-family-rent

Not necessarily: some family buy to let lenders accept a reduced or nil rent because the loan is assessed on your income, while others expect some rent, and lenders set their own rules. 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 ([HMRC: Property Income Manual, PIM2130](https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2130)). Mortgage Lane does not give tax advice; an accountant or tax adviser can say how this applies to you.

**Q: Can I let my old home if I cannot sell it?**

faq-id: can-i-let-my-old-home-if-i-cannot-sell-it

Yes, you can let your old home if you cannot sell it, either 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. Consent to let keeps the existing mortgage in place and can be quicker, but the lender may charge a higher rate, an annual fee or both, and some lenders decline. A former home you lived in can be consumer buy to let if you own no other let property; if you do, the new mortgage is treated as business buy to let.

**Q: Why is letting to family regulated?**

faq-id: why-is-letting-to-family-regulated

Letting to family is regulated because a loan to an individual secured on property that is at least 40% used as a home is a regulated mortgage contract unless an exclusion applies, and the buy to let exclusions do not apply when a related person lives there ([legislation.gov.uk: Regulated Activities Order, article 61A](https://www.legislation.gov.uk/uksi/2001/544/article/61A)). The investment property loan exclusion needs less than 40% of the property to be used as a home by the borrower or a related person, and consumer buy to let needs a property that neither of them lives in. Lenders must then apply the Financial Conduct Authority's (FCA) residential rules, including the affordability assessment, whether or not the relative pays rent.

**Q: Do I pay stamp duty surcharge on a home for family?**

faq-id: do-i-pay-stamp-duty-surcharge-on-a-home-for-family

If you already own a home, buying another for a family member usually means paying the higher rates for an additional property, because you will own two homes. In England and Northern Ireland, Stamp Duty Land Tax (SDLT) is charged at 5 percentage points above the standard rates, so a £250,000 home costs £15,000 as at October 2026, against £2,500 at the standard rates ([GOV.UK: buying an additional residential property](https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property)). Wales charges higher rates of Land Transaction Tax, and Scotland adds an 8% Additional Dwelling Supplement to Land and Buildings Transaction Tax. Mortgage Lane does not give tax advice, so check your case with your solicitor or a tax adviser.

**Q: Can I let an inherited property with a mortgage?**

faq-id: can-i-let-an-inherited-property-with-a-mortgage

Yes, you can let an inherited property with a consumer buy to let mortgage, to raise money against it or refinance a loan already on it, assessed mainly on the rent. Because you did not buy the property to let, the law does not automatically treat you as a business borrower, and if you own no other let property the loan can be consumer buy to let. 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.

**Q: What is an accidental landlord?**

faq-id: what-is-an-accidental-landlord

An accidental landlord is someone who lets a property without having planned to become a landlord, typically because they inherited it, moved in with a partner or could not sell their previous home. The Financial Ombudsman Service notes that consumer buy to let mortgages have been available to accidental landlords since 21 March 2016 ([Financial Ombudsman Service: buy-to-let mortgages](https://www.financial-ombudsman.org.uk/consumers/complaints-can-help/mortgages/buy-let-mortgages)). An accidental landlord's mortgage can be consumer buy to let if they did not buy the property to let and own no other let property; otherwise it is business buy to let. If the home still has a residential mortgage, the lender must agree to the letting.

**Q: How is consumer buy to let assessed?**

faq-id: how-is-consumer-buy-to-let-assessed

Consumer buy to let is assessed mainly on the rent, like other buy to let, 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 ([legislation.gov.uk: Mortgage Credit Directive Order 2015, Schedule 2](https://www.legislation.gov.uk/uksi/2015/910/schedule/2)). It must also give you a lending illustration before you commit and show reasonable forbearance if you fall behind. Firms that lend, arrange or advise on consumer buy to let must be registered with the Financial Conduct Authority (FCA) for it.

**Q: What is a business purpose declaration for buy to let?**

faq-id: what-is-a-business-purpose-declaration-for-buy-to-let

A business purpose declaration is a statement the borrower signs, as part of the mortgage agreement, that the buy to let is wholly or predominantly for a business they carry on or intend to carry on. It also says the borrower understands they will not have the consumer buy to let protections and should take independent legal advice if in doubt. Once it is signed, the loan is presumed to be business buy to let, outside the consumer regime, unless the lender knows or has reasonable cause to suspect otherwise ([legislation.gov.uk: Mortgage Credit Directive Order 2015, article 4](https://www.legislation.gov.uk/uksi/2015/910/article/4)). Some lenders ask every buy to let borrower to sign one, including existing landlords.

**Q: Can I remortgage a family buy to let?**

faq-id: can-i-remortgage-a-family-buy-to-let

Yes, you can remortgage a family buy to let with a lender that offers regulated family lending, assessed again on your income, or take a product transfer 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 Financial Conduct Authority's rules ([FCA Handbook: MCOB 11.6.3R](https://www.handbook.fca.org.uk/handbook/MCOB/11/6.html)). If your relative moves out and you let the property to a tenant who is not family, it is no longer family buy to let, and a business or consumer buy to let mortgage may become the right product, assessed on the rent.

**Q: Can I complain to the Financial Ombudsman about a consumer buy to let?**

faq-id: can-i-complain-to-the-financial-ombudsman-about-a-consumer-buy-to-let

Yes, consumer buy to let borrowers can take complaints about their lender or broker to the Financial Ombudsman Service, whose compulsory jurisdiction covers consumer buy to let business ([FCA Handbook: DISP 2.3](https://www.handbook.fca.org.uk/handbook/DISP/2/3.html)). Family buy to let is a regulated mortgage, so complaints about it can go to the ombudsman too. Business buy to let borrowers have more limited access: letting counts as a business, so a landlord can complain about a lender regulated by the Financial Conduct Authority only if they meet the ombudsman's small business criteria, and complaints about brokers of business buy to let are considered only in limited cases ([Financial Ombudsman Service: buy-to-let mortgages](https://www.financial-ombudsman.org.uk/consumers/complaints-can-help/mortgages/buy-let-mortgages)).

**Q: Is a regulated buy to let more expensive?**

faq-id: is-a-regulated-buy-to-let-more-expensive

Regulated family buy to let is priced by loan to value band, like other mortgages, so it is not necessarily more expensive on rate, but not every buy to let lender offers it and the choice of products can be narrower. Depending on the lender, it sits on its residential or specialist ranges, and consumer buy to let on its buy to let ranges. The main cost is often the effect on your own affordability, because the family mortgage counts against your income when you next borrow on your own home. Product fees and early repayment charges vary by lender.

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Published: 2026-10-08

Last reviewed: 2026-10-12

Source: https://mortgagelane.com/mortgages/regulated-buy-to-let-mortgages