Can You Get A Buy-To-Let Property Without Owning A Residential Property?

Introduction

Hello and welcome back to our channel and podcast. My name is Gemma, and here at WIS we talk about everything related to money, mortgages, and a positive money mindset.

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At WIS, we are a fee-free broker, which means we get paid by the lender, not you. Originally, we were set up to support our accountancy clients, particularly the self-employed and contractors, in finding mortgages. Over the last 10 years, we’ve expanded to cover all types of mortgages, from first-time buyers to expats, contractors, and more.

We also provide services in accountancy, mortgages, insurance, pensions, and wealth management.

On today’s episode of Let’s Talk Money and Mortgages, we’re joined once again by Ifty—a trained accountant and mortgage advisor with over 10 years of experience.

Q1: Why is it difficult to buy a buy-to-let without owning a residential property?

Ifty:

There are many reasons, but the biggest one is something called “backdoor residential.”

Buy-to-let mortgages are generally easier to obtain than residential mortgages because they are usually self-funding—the rental income covers the mortgage payments.

Most lenders require borrowers to show an income of around £25,000 to ensure they can cover payments in case the property is empty.

The problem: Some people abused the system. They would:

• Apply for a buy-to-let mortgage (only needing to show £25,000 income).
• Move into the property themselves instead of renting it out.
• Take advantage of interest-only payments, which are much cheaper than a repayment residential mortgage.

This misuse created alarm in the industry, leading lenders to become reluctant to offer buy-to-let mortgages to people who don’t already own a residential property.

Q2: Are there any solutions or exceptions to this rule?

Ifty:

Yes, there are a few exceptions, though not many. Let’s look at some cases where lenders may still allow it:

1. Married Couples
   • Example: A husband owns a residential property.
   • The wife wants to buy a buy-to-let in her name.
   • Some lenders allow this for tax planning reasons, since the wife already lives in the husband’s property.
2. Living with Parents
   • A child lives in the family home and has no reason to move out.
   • The child wants to purchase a buy-to-let property.
   • Some lenders accept this situation, though not all.
3. Buying Through a Limited Company
   • An individual may live with parents or a spouse but chooses to buy the buy-to-let property through a company name.
   • Specialist lenders are usually more open to this option.
4. Expats
   • Expats are UK citizens living abroad.
   • Since they already live outside the UK and have no intention of occupying the property, some lenders allow them to purchase buy-to-let properties here.

Q3: What should someone considering this option do?

Ifty:

The best first step is always to speak to an advisor.

This is a specialist area, and every case is unique.

Advisors know which lenders are more flexible and can ask the right questions on your behalf.

Since not all banks will allow these exceptions, having guidance is often essential.

Key Reminders

These points may or may not apply to everyone.

Always speak to an advisor to check if the options are suitable for your situation.

If you don’t have an advisor, our WIS contact details are below—we are always happy to help.

Important Note: As a mortgage is secured against your home or property, it may be repossessed if you do not keep up with repayments.

Closing

Thank you for joining us today. We’ll be back next week with another episode of Let’s Talk Money and Mortgages.

Have a great day and stay safe!