Can Investors Live in Their Buy to Let Property?

Nikka Sulton

Can Investors Live in Their Buy to Let Property?

Living in a buy-to-let property is generally not allowed, especially if you have a buy-to-let mortgage. These mortgages are designed for landlords, not residents. To live in a property, you’d need a standard mortgage.

if you’ve obtained a buy-to-let mortgage to finance your property, residing in it is not allowed. These mortgages are designed for landlords and investors, and living in a property financed with a buy-to-let mortgage would violate the terms of the mortgage agreement. In such cases, you would need a standard mortgage if you intend to live in the property.

What Exactly Is A Buy To Let Property?

A buy-to-let mortgage is tailored for property investors and landlords. To acquire a property for rental purposes, you must either pay for it outright or secure a buy-to-let mortgage. This serves as an investment, potentially generating income when tenants rent your property.

However, being a landlord comes with significant responsibilities. Property maintenance and covering certain expenses, such as damages, fall under your purview.

Before buying a property for rental, thorough research is essential. Finances, including property development finance, mortgage rates, taxes, and repayments, need careful consideration. Additionally, your target market, the tenant demographic you aim to attract, plays a crucial role in your decision.

For example, in Liverpool, proximity to universities may make student rentals a viable choice, while others prefer families or young professionals as tenants.

Regardless of whether you plan to build a portfolio of rental properties for income or opt for a single rental, thorough research or consultation with a mortgage broker is paramount.

Lastly, it’s vital to weigh the pros and cons of buy-to-let mortgages carefully before committing to one.

Why Can’t I Live on My Property If I Have a Buy-to-let Mortgage?

Living in a property funded by a buy-to-let mortgage breaches mortgage terms set by the Financial Conduct Authority (FCA). These mortgages differ from residential ones and are intended exclusively for letting tenants.

Buy-to-let mortgages are closely tied to the private rented sector, as defined by the Ministry of Housing, Communities, and Local Government. Monthly rental income typically covers mortgage repayments, making the loss of rental income a concern for lenders.

Moreover, buy-to-let mortgages often come with higher interest rates and minimum deposit requirements compared to standard residential mortgages. In summary, attempting to reside in a buy-to-let property financed by such a mortgage is not advisable.

What if I were caught living in buy to let:

Living in your buy-to-let property goes against the law and has serious repercussions. It constitutes mortgage fraud, leading to immediate loan repayment demands by the lender. Mortgage breaches could also result in criminal charges under the Fraud Act 2006, carrying penalties of up to 10 years in prison and a criminal record, making future financial dealings challenging.

Consulting specialist advisors before making decisions is crucial. Breaching buy-to-let rules may land you on the rogue landlord and property agents list, negatively impacting your ability to secure loans or conduct business with banks and lenders.

Occupying a buy-to-let property unlawfully can escalate into further fraud, as you might provide false information to other companies to conceal your residency. Such actions worsen your legal troubles and the consequences associated with mortgage fraud.

Ultimately, engaging in mortgage fraud can lead to permanent loss of landlord status, making it exceedingly difficult to secure future mortgage loans, and branding you as a rogue landlord.

I Own My Investment Property Outright – Is it a Good Idea to Live in My Buy-to-Let Property?

Living in a buy-to-let property is legal if you own it outright, but it might not be the wisest choice. You’d miss out on rental income, the primary reason for your investment.

If your property has tenants, issues arise. Occupying it breaches your tenancy agreement, allowed only if it’s vacant when you move in. Eviction for personal use is possible under two conditions:

A long-term tenant nears the end of their fixed-term agreement.
A long-term tenant violates their tenancy terms, like not paying rent or damaging the property.