Understanding Regulation in Buy-to-Let Mortgages and the Impact of Consumer Duty. The regulation of buy-to-let mortgages has long been a topic of discussion within the mortgage industry. Liz Syms, CEO of Connect for Intermediaries, recently shared her insights on this issue in the buy-to-let section of the new Certificate Practitioner in Specialist Property Finance (CPSP). This qualification was developed through collaboration with the Financial Intermediary and Broker Association (FIBA) and the London Institute of Banking and Finance (LIBF).
Are Buy-to-Let Mortgages Regulated?
Buy-to-let mortgages hold a distinct place in the UK mortgage landscape. Unlike residential mortgages, which fall entirely under the Financial Conduct Authority (FCA) rules, buy-to-let transactions may or may not be regulated, depending on whether they are classified as consumer or business arrangements. Brokers and advisers need to understand these differences to provide compliant, informed advice.
The introduction of the CPSP qualification reflects the growing need for advisers to stay current on regulation in specialist property finance. Designed for professionals working in this niche market, the course enhances regulatory knowledge and equips advisers to navigate compliance challenges better when supporting clients in the buy-to-let space.
Why Consumer Duty Matters in Buy-to-Let Advice
Although many buy-to-let mortgage cases fall outside formal FCA regulation, Consumer Duty principles still apply. Advisers must communicate clearly, act transparently, and always prioritise client outcomes. This includes explaining terms and risks in full and ensuring clients can make informed financial decisions. Upholding these standards builds credibility and supports long-term relationships with landlords and property investors.
Mortgage networks play a key role in helping advisers meet these expectations. At Connect, we offer compliance support and AI-powered tools to ensure advisers are fully equipped to meet both regulatory and ethical standards when advising on buy-to-let products.
Developing Adviser Expertise in a Complex Market
The evolving regulatory environment makes ongoing professional development a priority for advisers. Through targeted qualifications such as the CPSP, advisers gain specialist knowledge that strengthens their ability to manage complex cases and protect clients’ interests. Whether dealing with portfolio landlords, consumer buy-to-let, or limited company purchases, this expertise supports better advice and stronger outcomes.
To explore further support in navigating specialist mortgage cases, visit our page on the specialist mortgage network for advisers.
So, what’s the answer? It depends on the type of buy-to-let mortgage involved.
| Type of Buy-to-Let | Description |
|---|---|
| Consumer Buy to Let | This category applies to individuals who unintentionally become landlords, such as those who inherit a property or rent out a home they previously lived in. These cases are classified as Consumer Buy-to-Let and are governed by the Financial Conduct Authority (FCA) regulatory framework.
Advising clients in this area requires the correct permissions from the FCA. If you’re exploring this space, it’s essential to ensure your mortgage network supports advisers with the appropriate compliance structure. |
| Family Buy to Let | In this case, at least 40% of the property is occupied by an immediate family member. A common example includes parents buying a property where their adult child lives as a tenant. The FCA fully regulates this arrangement and is subject to the Mortgage Conduct of Business (MCOB) rules.
Advisers managing these cases must hold mortgage qualifications and have regulatory permissions for residential lending. Learn how we support advisers handling complex cases through our specialist mortgage network. |
| Business Buy to Let | This is the most common type of buy-to-let transaction. Here, the borrower is viewed as operating a business, and the FCA does not regulate the loan. Although there was a temporary overlap between 2014 and 2016 during the transition from Consumer Credit Regulation to the Mortgage Credit Directive, business buy-to-let is now entirely excluded from regulation.
However, it is still essential for advisers to stay current with regulatory changes. Complaints relating to transactions made during that transitional window may still be eligible for review by the Financial Ombudsman Service. If you’re advising in this sector, choosing the right mortgage broker network that provides compliance insight and ongoing regulatory updates is vital. |
Why it’s Significant
Understanding the importance of consistent advisory practices is vital as the industry aligns with the FCA’s Consumer Duty guidelines. The Financial Conduct Authority has clearly stated that providing advice on both regulated and unregulated products without applying the same standards can contradict the core principles of Consumer Duty.
For FCA-authorised mortgage advisers specialising in residential mortgages, applying consistent advice standards across both residential and buy-to-let mortgage cases is often straightforward. However, advisers who focus on business buy-to-let, which is not currently regulated, face unique challenges.
Although FCA regulation is not compulsory for advisers in the business buy-to-let space, many lenders prefer to work only with advisers from a regulated firm. Some lenders also expect advisers to hold recognised qualifications such as CeMAP.
That said, while CeMAP covers general mortgage advice, it may not fully prepare advisers for complex areas such as HMO licensing, limited company buy-to-let lending, rental stress testing, and property tax implications, key topics that are critical in the buy-to-let sector.
This is where the new CPSP qualification becomes invaluable. Even though business buy-to-let remains outside the scope of regulation, CPSP equips both regulated and unregulated advisers with the knowledge needed to navigate these complexities and offer high-quality, compliant advice.
The CPSP programme addresses real-world scenarios and lender criteria often overlooked by traditional certifications. For advisers aiming to deepen their expertise and better serve buy-to-let clients, earning this qualification is a smart, forward-thinking move.
For more guidance on developing your advisory knowledge, explore our insights on why mortgage advisers benefit from network support.
Why Brokers Should Join a Network?
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Thank you for reading our publication on “Consumer Duty | Buy-to-Let Reveals Gap in Lending Education.” Stay “Connect“-ed for more updates soon!