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Connect Mortgage Academy | Quirks of BTL Needs Overhauling

Connect Mortgage Academy

Connect mortgage academy


Liz Syms, CEO of Connect for Intermediaries, examines the intricacies of buy-to-let (BTL) regulations. She stresses the urgent need for a comprehensive overhaul. At the Connect Mortgage Academy, we train aspiring BTL mortgage advisers. We explore the complex world of mortgage regulations and the nuanced permissions required in advisory roles.

Liz Syms
Liz Syms, CEO and Founder of Connect

BTL regulations often confuse many advisers until explicitly addressed. Business BTL, notably, is not regulated by the Financial Conduct Authority (FCA). This creates a scenario where almost anyone could start a BTL mortgage advisory business without regulatory constraints or qualifications.

However, the path is not as straightforward as it seems. Most BTL lenders hesitate to consider applications from advisers not affiliated with regulated companies. Some lenders require advisers to have consumer credit permissions from the FCA for non-FCA-regulated BTL transactions. More than half of the lenders in the BTL market demand advisers hold comprehensive residential FCA-regulated permissions.

As a result, many commercial brokers with only consumer credit permissions cannot advise on BTL mortgages from prominent lenders like BM Solutions, The Mortgage Works, and Kent Reliance. This regulatory issue highlights the need for a significant reassessment and modernisation of the existing BTL regulatory framework.

Connect mortgage academy | Lender Criteria for Buy-to-Let (BTL) Mortgages

Understanding regulatory considerations is crucial when handling Buy-to-Let (BTL) mortgages. in the UK. There are two main categories of regulated BTL, each with distinct requirements.

Consumer Buy-to-Let

The first category is consumer BTL, which requires separate Financial Conduct Authority (FCA) permission for advisory services due to the implementation of the Mortgage Credit Directive (MCD). Consumer BTL usually involves ‘accidental landlords’ who have inherited a property or decided to lease a former residence. However, complexities arise when properties are let for business purposes, potentially falling outside consumer BTL regulations. Lenders’ criteria differ so that advisers may need FCA permission from one lender but not another.

Family Buy-to-Let

The second category is family BTL, where the property is leased to an immediate family member. This situation demands comprehensive regulated residential mortgage permissions.

Navigating Distinctions

Advisors must navigate these distinctions carefully, considering each lender’s criteria and regulatory requirements. Understanding nuances like accidental landlords and family BTL arrangements is crucial. Providing accurate and effective advice in the diverse BTL mortgage landscape is vital. This is an invaluable lesson from the Connect Mortgage Academy.


Advisers must know the specific requirements for consumer and family BTL mortgages. Different scenarios demand distinct regulatory considerations. Navigating these complexities ensures compliance and effective client service in the UK mortgage market.

Connect Mortgage Academy | Capital quirks

Capital raising has unique aspects that can surprise many. It seems logical that loans secured against one’s primary residence need full regulation. However, there are intriguing exceptions.

Funds acquired for ‘business purposes’ are outside regulation. Imagine a client with a first-charge loan on their home wanting to use the equity for business investments, like buying equipment.

The loan remains unregulated if they establish a second charge for this purpose. Depending on lender policies, the adviser might not need regulation either.

The complexities don’t end there. Advisers in commercial mortgage transactions might need FCA consumer credit permission if clients buy property in their personal name. But, if the client uses a limited company, no such permission is required.

These peculiarities stem from the Mortgage Credit Directive (MCD), initially driven by the European Union. The question arises: Will the Financial Conduct Authority (FCA) address and rectify these anomalies post-Brexit? The resolution of such uncertainties remains a topic of interest in the financial landscape.

We conclude our discussion on “Connect Mortgage Academy | Extraordinary Crazy Regulation Quirks of Buy-to-Let Need Overhauling.”

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