Can I Live in my Buy-to-Let Property?
A common question asked by landlords is, can I live in my buy-to-let property? The short answer is that, if there is a mortgage on the property, taken out on a buy-to-let basis, then this will prohibit borrowers from taking residence. Let’s take a closer look at the finer detail of how the rules on living in buy-to-let property actually work.
A common question asked by landlords is, can I live in my buy-to-let property? The short answer is that, if there is a mortgage on the property, taken out on a buy-to-let basis, then this will prohibit borrowers from taking residence. Let’s take a closer look at the finer detail of how the rules on living in buy-to-let property actually work.
Financial Conduct Authority (FCA) rules usually prevent buy-to-let borrowers from taking residence within their rental properties. This is because the FCA draws a line between residential and landlord mortgages.
What is the difference between a buy-to-let mortgage, and a regular mortgage?
Unlike mortgages for owner-occupiers, most buy-to-let finance does not fall under FCA regulation. As a commercial investor, a landlord would benefit from flexibility that may not be available under FCA regulations.
However, living in a property requires a regulated mortgage. Lenders can face enforcement action by the FCA if they fail to ensure at the point of sale that a client is in receipt of suitable advice. So, if you have the intention of living in a property, even if it is just for a single night, then the mortgage on it has to be regulated.
It is for this reason that the majority of buy-to-let mortgage contracts provide that the client does not live in the property themselves, under any circumstances. Therefore, if you live in your rental property whilst it is financed by a buy-to-let mortgage, then the mortgage agreement will be invalidated. If the lender finds out, then they could well ask that you repay the loan in full.
Are there any circumstances under which a landlord can occupy a buy-to-let property?
All of this does not mean that you may not be able to occupy your investment property in the future. Buy-to-let finance isn’t always unregulated. If a landlord wishes to let their property to a relation, or they state in advance that they have plans to occupy it in the future, then the transaction will fall under FCA regulation.
If you take out a regulated buy-to-let mortgage in such circumstances, then you or a family member will usually be allowed to occupy 40 per cent or more of the mortgaged property, under FCA guidelines.
If you have repaid your buy-to-let mortgage in full, then you are free to do as you please, as there is no legal charge on the property.
It is important however to ensure that you meet your legal obligations as a landlord. If you have tenants occupying your property, and you wish to take possession so that you can live in it yourself, then you will need to follow the appropriate guidelines to end a tenancy agreement.
Want to offload your landlord legal responsibilities?
Hand over your property management to homes2let, and take advantage of guaranteed rent.
The legal and regulatory side of being a landlord can be a real headache. If you’d prefer not to have to deal with these aspects, why not hand over your property management to homes2let and take advantage of our guaranteed rent scheme at the same time?
Not only will we take care of the legal side of renting your property, we’ll also handle all the everyday maintenance, property inspections and tenant sourcing and referencing, as well guaranteeing your rent every month, even when the property is untenanted.
To discover how we can make your life easier as a buy to let investor, please get in touch with our helpful team.
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