Buy-to-Let Guide: Everything You Need to Know

Last updated: May 2026 · 8 min read

Buy-to-let remains one of the most popular investment strategies in the UK, but the landscape has changed significantly since the tax changes introduced from 2017 onwards. Here is what you need to know before purchasing your first rental property.

Buy-to-Let Mortgages

BTL mortgages typically require a minimum 25% deposit (some lenders accept 20%). Interest rates are higher than residential mortgages, usually 1-2% more. Most BTL mortgages are interest-only, meaning your monthly payment only covers interest — you repay the capital when you sell the property or at the end of the term. Lenders assess affordability based on rental income, which must usually cover 125-145% of the mortgage payment at a stress-tested rate of around 5.5%.

Stamp Duty on Buy-to-Let

As an additional property, you pay the standard SDLT rates plus a 5% surcharge on each band. On a 200,000 pound purchase, the stamp duty is 7,500 pounds rather than 0 for a first home. This is a significant upfront cost that must be factored into your investment calculations. Check exact figures using the stamp duty calculator.

Legal Obligations as a Landlord

You must provide an annual gas safety certificate, install working smoke alarms on every floor, ensure electrical installations are safe (EICR every 5 years), protect the tenant's deposit in a government-approved scheme within 30 days, provide an EPC rating of E or above, and serve the correct notices before eviction. Failure to comply can result in fines up to 30,000 pounds and your inability to evict tenants using Section 21.

Finding and Managing Tenants

You can self-manage or use a letting agent. Agents typically charge 8-12% of rent for full management or a one-off fee equivalent to one month's rent for tenant-find only. Right to Rent checks are mandatory — you must verify every adult tenant's immigration status before they move in. Reference checks should cover employment, previous landlords and credit history.

Tax on Rental Income

Rental profit is added to your other income and taxed at your marginal rate (20%, 40% or 45%). You can deduct allowable expenses: letting agent fees, insurance, repairs (not improvements), ground rent, service charges and accountancy fees. Mortgage interest is no longer deductible as an expense for individual landlords — instead you receive a 20% tax credit. Higher-rate taxpayers are significantly worse off under this system, which is why many now use limited companies.

Is Buy-to-Let Still Worth It?

The answer depends on your tax position, the location, the price you pay and your investment horizon. In areas with strong rental demand and reasonable prices (many Northern cities), net yields of 4-6% are achievable. Combined with long-term capital growth and leverage through a mortgage, total returns can be attractive. But it is no longer the easy win it was pre-2016. Run the numbers carefully before committing.