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Could a Consumer Buy to Let (CBTL) mortgage help your client?.

31 Oct 2024 | 2 min

With almost a third of landlords reported to have arrived in the situation 'by accident', it’s not surprising to that hear many people who find themselves with a property to rent out aren’t entirely sure of the finance options available to them. Can ‘accidental landlords’ rent out their property whilst continuing to pay their personal mortgage? Do they need a full Buy to Let mortgage?

A Consumer Buy to Let mortgage is an essential solution for brokers looking to help new landlords who find themselves in this unexpected position. In this article, we discuss what a Consumer Buy to Let is, the scenarios it can help in, a few of the issues and restrictions involved, and how Together can help you support your clients in these situations.

What is a Consumer Buy to Let?

A Consumer Buy to Let mortgage (CBTL) is a type of Buy to Let mortgage (BTL), designed for property owners who don’t fit the typical profile of a professional landlord, and are letting out a property due to specific personal circumstances. Usually they haven’t intended to buy the property to rent out, but now find themselves in a position where letting it out is a financially sensible or necessary solution.

Consumer Buy to Let mortgages differ from traditional buy to let mortgages, which are generally intended for experienced landlords with the primary purpose of property investment. Consumer Buy to Let mortgages are also regulated, offering greater consumer protection compared to a standard Buy to Let mortgage.

What are the typical Consumer Buy to Let lending scenarios?

Here are some common scenarios where a Consumer Buy to Let mortgage may be an appropriate lending solution for those looking to raise capital:

1. They’ve inherited a property

They may have inherited a property from a family member but they don’t wish to sell it immediately. Instead, they can rent it out to generate income, often to cover ongoing costs like maintenance, taxes, or any outstanding mortgage on the property. It also gives them the freedom to sell the property or move in themselves later down the line.

For many, inheriting a property comes at a difficult time, tinged with sadness. With other commitments and priorities following a bereavement, they may not have had the time to fully research what they need to do to rent out their new property.

Our simple guide can help in taking those first steps as a landlord, from finding a tenant and setting rent, to the legal and tax implications involved.

Find out more

2. They’ve relocated for work or personal reasons

A homeowner may need to move to a different place for work or personal reasons, but might want to retain ownership of their current home. They may love the area and plan on moving back in the future. Renting out the property through a Consumer Buy to Let mortgage allows them to cover mortgage payments and generate rental income while living elsewhere.

3. There’s been a change in a relationship

After a significant life change, such as a marriage, divorce, or moving in with a partner, an individual may wish to rent out their previous home rather than sell it. A Consumer Buy to Let mortgage enables them to do this without converting to a full Buy to Let mortgage aimed at professional landlords.

4. They’ve downsized or upsized

When a homeowner decides to downsize or upsize to a different property due to a change in family size or financial situation, they could choose to keep their existing property as a rental. This scenario often occurs when the owner believes the property may increase in value or wants to generate rental income.

5. There’s been a delay selling their existing property

Due to a sluggish property market or unfavourable economic conditions, the owner may struggle to sell their home at the desired price. A Consumer Buy to Let mortgage allows them to let the property until the market conditions improve, providing a temporary solution to avoid financial loss.

Consumer Buy to Let isn’t the only solution in this scenario. For many people, they may be relying on the money from selling their existing home before they can buy their new property. In this instance, a Bridging Loan may be the more beneficial option; giving them the finance they need and up to 12 months to wait for a better offer or house values to increase.

Find out how a bridging loan could support your clients in a range of different scenarios in our blog.

Find out more

6. They’re elderly homeowners moving to assisted living

An elderly homeowner may be looking to move to an assisted living facility or move in with family, but they may not want to sell their home. They may wish to pass it on to family as part of an inheritance, or they may simply be waiting on a better time to sell. Renting out the property through a Consumer Buy to Let mortgage can provide additional income to cover care costs or supplement their retirement funds.

In all these scenarios, the property owner hasn’t initially purchased the property to rent it out for business purposes, but has become a landlord due to circumstances that make letting the property a sensible or necessary choice.

What restrictions and issues should you ensure your client is aware of?

As you can see, a Consumer Buy to Let mortgage is a great solution for a wide range of scenarios. However, there are a few things that your client needs to be aware of before they start renting out their property:

With a Consumer Buy to Let mortgage from Together, your client cannot rent the property out to a family member.
As the landlord, your client may be responsible for additional costs, such as general maintenance for the property and any service charges or ground rent.
With Together, they will need to amend their current agreement, or obtain consent prior to letting out their home.
A Consumer Buy to Let mortgage is not suitable if your client plans on expanding their rental portfolio.
As your client will only have a single rental property, rather than a portfolio, they could be at increased risk of periods of time were the property doesn’t have tenants and they have no rental income. Your client will need to keep up with their regular monthly mortgage payments throughout these periods, or their property could be at risk of repossession.

At Together, we can help you support your clients

We can offer*:

First and Second Charge Consumer Buy to Let mortgages
Variable, 2-year and 5-year fixed rate mortgages
Consent to follow post offer (Second Charge only)
No maximum age restriction
Projected rental income accepted even if no Assured Shorthold Tenancy is in place
Cases from UK expatriates are considered

*Correct at time of publishing.

Please check out our latest Product Guides for the latest criteria and rates on Consumer Buy to Let mortgages.

Consumer Buy to Let mortgages are just one of our range of flexible finance products, designed to help as many people, in as many diverse scenarios, as possible. We always make our common-sense lending decisions based on individual circumstances, which often means we can provide solutions when others can’t (or won’t).

If you’d like to speak to us about how we can support your clients’ property ambitions, please call our expert team.

Packaging partners: Speak to our team on 0161 933 7101 for further support.

Network and Clubs brokers: Get in touch on 0161 468 3993.