How Long Can You Live in an Investment Property?

What Is an Investment Property? 

Before we get into the nitty-gritty, 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. 

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

Can I Live in My Own Investment Property? 

In short: no, you cannot live in an investment property if you’ve purchased your property investment with a buy to let mortgage. 

This is because living in an investment property will be in breach of your mortgage terms, which has been specifically designed for property investors to let to tenants.  

The Financial Conduct Authority differentiates normal mortgages and BTL mortgages differently, which means that mortgage lenders will specify that your investment property should only be let to tenants. 

Naturally, without tenants in your home, you won’t be generating the rental income needed to cover mortgage payments.  

Without this expected rental income, you’ll likely be unable to cover the investment property loan, which will be a cause for concern for your investment property mortgage provider. 

However, if you didn’t use a buy to let mortgage to purchase your rental property, then you’re free to live in the property for as long as you want. 

What Happens if You Move into Your Investment Property With a Buy to Let Mortgage? 

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.  

1. You could be put on the Rogue Landlord Database. 
2. You could be found in breach of the Fraud Act 2006 and could face jail time. 
3. Your mortgage lender could require you to pay off the entire mortgage payment in full. 

This is likely something 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.  

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. 

How Long After Buying an Investment Property Can You Live in It? 

As already mentioned you can’t live in an investment property purchased with the help of a BTL mortgage. However, once the mortgage term ends and you’ve paid off outstanding debt, you can then move into the home as you already own it. 

This means that you’ll need to wait for the mortgage term to end, which is usually around 25 years after buying an investment property before you can live in it. 

Can a Family Member Live in an Investment Property? 

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 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. 

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