How Long Can You Live in an Investment Property?

Before we jump in, it’s important to address exactly what we mean by an investment property.

An investment property is real estate that has been purchased with the intent of generating money. This means buying rental property like commercial, student or residential real estate, and renting to tenants to generate rental income.

Any kind of property can be an investment property, from flats to houses to office space.

You can use your own personal funds to purchase an investment property or use a buy-to-let mortgage. Buy-to-let mortgages are different from residential mortgages in several ways and are often not regulated by the FCA (Financial Conduct Authority).

In other words, buying an investment property means you’re a real estate investor.

You may think it’s a good idea to move into your investment property as long as you don’t get caught, but there are some huge implications of living in rental properties and real estate purchased under a buy-to-let mortgage agreement.

• You could be put on the Rogue Landlord Database, meaning you will be blacklisted from renting out properties, and renters will see you have committed a bannable offence.
• You could be found in breach of the Fraud Act 2006 and could face jail time.
• Your mortgage lender could require you to pay off the entire mortgage payment in full.

These are likely consequences you’ll want to avoid, so real estate investors looking to live in investment properties should consider switching their buy-to-let mortgage over to a traditional residential real estate mortgage.

To do this, you’ll need to speak to your mortgage lender and remortgage. However, this may not be possible as not all lenders will offer both buy-to-let mortgages and residential mortgages.

Residential mortgages are regulated by the FCA, and so your lender will want to change your mortgage over to a residential one to gain access to the increased protection the FCA provides for both parties if possible.

If in doubt, seek professional advice for all things real estate investing. This can include learning more about property taxes and tax implications, mortgage insurance, interest rates, and more.

Yes, rental properties can be rented to a family member. However, there are some rules and tax implications you need to be aware of, specifically surrounding mortgage rates on your buy-to-let property.

Many lenders offering mortgages will see renting to your family as a higher-risk investment, and may even refuse to allow family or friends to stay in homes purchased through a mortgage.

This is because you may be more lenient towards your family tenant, meaning you may not chase missed rental payments, evict them if they are breaking rules, or you could allow them to save money by charging less rental income.

While this is understandable and admirable, it may mean you struggle to keep up with mortgage repayments. You may find your lender chasing you down to get the repayments, which is not a situation you want to be in.

As always, seek advice from a financial expert or speak to your lender to see their rules on renting to family.