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I know very little about the housing market or mortgages (it's just not taught in school in the UK, whereas oxbow lakes and pathetic fallacy are), but within a year I should be able to get my foot on the property ladder.

I've been getting ahead of myself and browsing property websites to get an idea of what to expect, but I've been specifically looking at flats/apartments in an unspecified city centre and am finding a significant amount come with the following message in the property description:

Buy-to-Let ONLY / Investment Opportunity / blah blah blah

I understand that a buy-to-let mortgage is different from one used to purchase a property to live in yourself, and that you can't live in a property bought with a buy-to-let mortgage and vice versa.

My question is how is the seller in a position to dictate this? Surely the arrangements and terms of the mortgage are between me and my bank or building society. Once I've bought the property, it doesn't belong to the seller any more and it's not their concern whether I intend to live in there or not, so how can they stipulate ahead of time that I can only buy the property with a buy-to-let mortgage and then not live in it?

  • In the UK specifically, in theory they could write into the deed a clause requiring the owner to do something with the property. But this would be unusual. – Vality Apr 11 at 19:27
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    In many cases these terms mean there is already a tenant in situ, and the property will not be offered with vacant possession. It will therefore be unmortgageable under a standard residential mortgage and only a cash buyer or a buy-to-let buyer will be able to complete. In other cases it may be that the property is unmortgageable on normal terms for other reasons, such as having no working heating system or kitchen or being in very poor repair. – Owain Apr 11 at 20:06
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    @Owain That should be an answer. – Rupert Morrish Apr 11 at 20:22
  • The short answer is no. Generally speaking, the seller can't dictate how the property is used once it's sold. The limitation here comes from other factors, as @Owain describes. – Steve Melnikoff Apr 12 at 9:09
  • Can you add links to some examples of this you've seen? – user568458 Apr 13 at 15:16
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"Buy-to-let only" probably means that there is currently a tenant in the property, and the vendor will not (possibly cannot) evict them prior to sale.

This would mean that you would not be able to raise a residential mortgage on it, only a buy-to-let mortgage. The vendor doesn't want you to make on offer, then find this out two months down the line, withdraw your offer, and cause them to put the property back on the market having lost two months of their time.

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It is possible to insert a covenant into the deeds of the property that binds the purchaser of a property, and any subsequent buyer, to do something or not to do something. That covenant can subsequently be enforced against the purchaser if they break it. So it's something to be checked for whenever buying a property.

There are all sorts of covenants that get attached. These may allow neighbours access along a shared driveway, or prevent the building of fences right on the property line on new estates with no pavements beside the road.

In my deeds, there is a restriction that I am not allowed to build anything on my land without permission of the local council.

Edit: If it's a leasehold flat, then also check the terms of the lease very carefully. That's another place that sellers can place restrictions, and some of those can be quite onerous, or expensive.

  • As you say, covenants are common for the type of issues described. But is it common to specify who can live in a property (i.e. tenants vs owner-occupiers)? I'd speculate that it isn't, as it doesn't really affect anyone else, whereas covenants tend to be about preserving rights, or minimising disruption, to/for others. – Steve Melnikoff Apr 12 at 9:08
  • @SteveMelnikoff It would be unusual to restrict who is allowed to live there. Owain's comment above may be correct, or maybe the sellers think that a retail purchaser may struggle to get a mortgage, and the seller doesn't want to waste time talking to them. – Simon B Apr 12 at 11:33

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