Consumer buy-to-let

A consumer buy-to-let mortgage, often shortened to CBTL, is a buy-to-let mortgage that the borrower has not taken out wholly or predominantly for the purposes of a business. Under the Mortgage Credit Directive Order 2015, which took effect on 21 March 2016, this category is regulated by the Financial Conduct Authority, unlike the majority of buy-to-let lending, which is treated as a business transaction and falls outside FCA regulation. It exists to protect so-called accidental landlords who did not set out to run a lettings business.

What makes a buy-to-let a consumer buy-to-let

The test is purpose, not property type. If you did not buy the property in order to let it as a business, the mortgage is likely to be a consumer buy-to-let. The clearest examples are accidental landlords: someone who inherited a property and chose to let rather than sell, someone letting a former home after moving in with a partner, and someone keeping their existing home to rent out while buying another to live in, known as let-to-buy. In each case the person became a landlord through circumstance rather than as a deliberate investment, which is the distinction the regulation turns on.

What FCA regulation means in practice

Because a consumer buy-to-let is regulated like a residential mortgage, the protections are stronger than on a standard buy-to-let. The lender must assess affordability against your personal income and expenditure rather than relying on the expected rent alone, any broker advising on the product must be registered with the FCA for consumer buy-to-let business, and you can escalate an unresolved complaint to the Financial Ombudsman Service. From working with landlords who never planned to let, we find this matters most at the point of remortgage, because that is usually when an accidental landlord first discovers their mortgage is regulated and the application process differs from the standard buy-to-let route their friends describe.

Consumer buy-to-let compared with a standard buy-to-let

A standard buy-to-let mortgage is taken out by someone buying specifically to let, which counts as a business and sits outside FCA conduct regulation. That borrower is, in the language of the lending market, a professional landlord rather than a consumer. The practical effects of the split are real: business buy-to-let lending is assessed mainly on rental income and offers a far wider choice of lenders and products, whereas consumer buy-to-let is assessed on personal affordability and is offered by fewer lenders. You cannot choose which category you fall into; it is determined by your circumstances and intentions, and you are not eligible for a consumer product if you are actively building a lettings business.

Consumer buy-to-let is not the same as regulated buy-to-let

The two terms are often used loosely as if they mean the same thing, but they are distinct. Consumer buy-to-let covers accidental landlords letting at arm's length. A regulated buy-to-let in the narrower sense usually refers to letting to a close family member, for example a parent buying a property for an adult child, which is regulated because a related person occupies the home. Both are FCA-regulated, but the qualifying circumstances differ, so it is worth confirming which applies before approaching a lender.

Frequently asked questions

What is a consumer buy-to-let mortgage?

It is a buy-to-let mortgage that was not taken out wholly or predominantly for business purposes, typically by an accidental landlord. It is regulated by the FCA, which gives the borrower protections similar to those on a residential mortgage.

Am I an accidental landlord who needs one?

Possibly, if you became a landlord through circumstance rather than by buying to let, for instance after inheriting a property, moving in with a partner, or relocating for work. You or a family member will usually have lived in the property, and you should not be in the business of letting.

How is it different from a standard buy-to-let mortgage?

A standard buy-to-let is a business loan assessed mainly on rental income and is not FCA-regulated, with a wide choice of lenders. A consumer buy-to-let is FCA-regulated, assessed on your personal affordability, and offered by fewer lenders.

Once I am letting, what are my obligations?

The mortgage category does not change them. A consumer buy-to-let borrower carries exactly the same duties as any landlord, covering deposit protection, safety certificates, and the tenancy rules under the Renters' Rights Act. Those obligations are the same whether your mortgage is regulated or not.