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Rental Property

Growing your portfolio or need to take money out of a property?

The lenders and Prudential Regulation Authority are making it increasingly difficult to navigate the Buy to Let market. Criteria that matched one day doesn't the next. We can save time by doing the heavy lifting for you

Buying a property to rent out can offer a regular income and hopefully capital appreciation over the long term, if the market increases.

While property prices in the UK have remained relatively stagnant, rents have increased, resulting in the yields on buy-to-let investments also increasing. Depending on the location and property type, buy-to-let yields are typically between 5 and 10%.  One of the key things to making a buy-to-let work is obtaining the best possible mortgage deal.

Buy-to-let products are similar to residential mortgages but generally have higher interest rates and larger arrangement fees.  The lenders will also require a greater deposit (or amount of equity for a remortgage), most prefer at least 25% but there are some who can accept 20% or even 15%. The level of deposit is often determined by the property type - new builds or flats demanding higher amounts.
Lenders frequently expect you to prove your income, this is to confirm your tax rate or ability to cover a rental shortfall. How much you can borrow is linked to the rental income but not calculated purely on that. The lenders will have a range of requirements, this could be coverage by 125 to 145% of the rent at an interest only calculation rate at 5 to 5.5%. The mortgage loan to property value ratio, your tax bracket and portfolio size will determine this.

First time buyers can buy a rental property, but will find it more difficult. Most high street lenders require a customer to have previously owned their own home or another Buy to Let. There will be options out there, just  expect to pay higher rates.

There are some lenders who will require a First Time Buyer to be able to the the mortgage in it's own right, as if it was their own residential property.

Portfolio landlords, who have four mortgaged buy-to-lets or greater, are more heavily assessed. You should have a detailed breakdown of the properties on an initial enquiry to help with the accuracy of any advice given.

LTD Co BTL has slowly becme more popular over the last few years. With the restriction of tax benefits from a let property, people are looking at other ways to minimise their costs. We are not tax advisers to recommend you speak to a specialist to see if this type of ownership is right for you. 

More information and typical criteria for a LTD Co BTL can be found here

Further  Information
How much can I borrow on a rental property?
Holiday/Short term lets
What is the rating on the EPC (Energy Performance Certificate) of the property I want to buy?How to Let: A government guide for current and prospective residential landlords in England

Your property may be repossessed if you do not keep up repayments on your mortgage.
Not all Buy to Let Mortgages are regulated by The Financial Conduct Authority

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