Buy To Let Property: 8 Actionable Tips

The Ultimate Guide to Buy to Let Investment

If you’re wondering how to make money from property, look no further than buy to let. Buy to let investment is one of the most popular and lucrative investment methods. By purchasing a buy to let property, investors can generate attractive returns and benefit from ownership of a valuable asset in the UK property market.

Before getting started with buy to rent, however, there are certain things you need to know about. Take a look at our detailed guide filled with in-depth buy to let tips and advice to help you get started on your investment journey. Whether you’re asking yourself ‘is buy to let a good idea for me?’ or want to explore the best place to buy to let UK cities have to offer, you can find all of this and more in our guide to buying property to rent.

Buy To Let Property Guide


Make Sure you Understand the Basics of Buy to Let

You might be an experienced investor who just wants to brush up on their buy to let property knowledge, or you could be familiar with property investment and have started looking for an opportunity, but still feel unsure on certain things. On the other hand, you could be neither of these and have no knowledge of buy to let whatsoever.

We all have to start somewhere, and understanding the basics of the buy to let business is one of the most crucial buy to let tips when beginning your property journey. If you’re a buy to let first-time buyer, read these following answers to some commonly asked questions.

What is Buy to Let?

Buy to let is a term that refers to purchasing a property for the purpose of letting it out to a tenant. Buy-to-let investors buy a property and make money from the rent paid by their tenant. When buying an investment property, this can either be purchased outright or with a buy to let mortgage.

When it comes to investments in property, buy to let has been popular since 1996, growing increasingly more prevalent over time. By 2007, there were over a million outstanding buy to let mortgages, increasing from half a million in 2004. As of 2019 and 2020, buy to let property investment is considered one of the best property investment strategies for those who want to make lucrative returns.

What Does Buy to Rent Mean?

Buy to rent in the UK has the same meaning as buy to let – it’s when someone owns a property and rents it out to tenants in order to generate regular income.  Buy to rent is simply an alternative piece of terminology that’s often used.

Residential Property Investment Tips

How Does Buy to Let Work?

In a nutshell, buy to let works in three simple steps: The investor purchases the property of their choice, finds a tenant who will agree to pay them regular monthly rental instalments, and then receives a return on their investment through these rental payments.

Over time, those who invest in buy to let can pay off their investment using the money they earn through rental returns. Then, if they hold on to the property and decide to sell it at a later date when valuation reveals an attractive price, they could maximise their returns through capital growth. This means that the value of their buy to let property has grown over time, allowing them to sell the property for a higher amount than the initial purchase price.

A lot of the time, those who find a property for investment purposes will choose the option of using a company to invest in buy to let. These companies, like RWinvest, specialise in offering developments that have been specifically created for investors, focusing on properties with the best buy to let rates, and in the best buy to let areas. The investor will then work out whether they wish to use a buy to let mortgage or pay in full for their buy to let UK property. You can find out more about the benefits of buying property through a company in our buy to let news update guide.

What is a Rental Yield?

Rental yields are a commonly used term in relation to buy to let. A rental yield is a percentage figure that highlights the rental returns an investor is likely to achieve. The higher the better, as higher percentages mean more attractive returns.

A rental yield is calculated by taking the yearly rental income generated from a buy to let property and dividing this by the property’s purchase price. It’s important to focus on rental yields that are as high as possible when you look for a buy to let property to invest in, as this figure can mean the difference between a lucrative and attractive long-term investment or a disappointing venture.

Buy to Let Tip: Read Our Rental Yields Guide to Find Out More

To learn more about buy to let yields and everything they involve, be sure to check out our rental yield guide. Here, you’ll find answers to some of the most commonly asked questions about yields, along with tips on how to identify a good yield and where to find the best buy to let yields in the UK.

pros and cons


Weigh up the Pros and Cons

After learning more about buy to let property investment, you might be asking yourself – ‘should I buy to let? Is buy to let a good investment for me?’

As a first-time buyer, buy to let can seem like a lot of hassle, leading you to wonder ‘is buy to let worth it?’ There are ways of knowing whether buy to let is the right property venture for you. If you are interested in making an investment but want something more tangible than stocks and shares, property provides a welcome alternative. However, you also need to understand both the pros and cons involved with buying buy to let properties before you decide whether you should invest to let.

The Pros of Buy to Let Properties

In the UK, buy to let properties provide an attractive investment option. The UK property market is currently performing at a high level, with rising house prices and increasing rental costs offering investors the chance to make some big returns. These rising rental costs in many parts of the UK are led by the soaring levels of demand for rental properties. Those who invest wisely and look for buy to let properties in high-growth areas with plenty of tenant demand are sure to find success with buy to let investment.

The fact that property prices in the UK are rising on a regular basis, and forecast to increase significantly over the coming years, means that investors have a high likelihood of receiving strong capital growth returns. This leads a lot of investors to weigh up the potential behind a pension or property investment venture when saving for retirement – many of whom opt to invest in buy to let alongside saving for a pension. 

buy to let risk

The Cons of Buy to Let Properties

As with any investment venture, buying property to let comes with a level of risk. To truly succeed when you invest in buy to let, you need to be willing to tie your money up for a long period of time and understand that property prices can fluctuate. Buy to let isn’t for the faint-hearted, and before getting started you need to not just understand, but also accept the risk that comes with BTL.

You could have found the perfect UK property in one of the best buy to let areas and with the best buy to let mortgage to buy it with, but would still be at risk of potential hazards along the way. Some of the most common risks that come with buy to let include market changes that could cause your property to decrease in value, and potential void periods. A void period is essentially a period of time where you don’t have a tenant in your property, and miss out on rental payments.

Should I Buy to Let? Is Buy to Let a Good Investment?

Buying property to rent can be a very lucrative and rewarding investment to make, offering a lot of potential to those who wish to increase their cash flow over time. While things like possible void periods and market changes could negatively affect your investment for a short period, the benefits of buying a buy to let property far outweigh these risks. Once you feel confident and prepared for any risks, you should move forward with your buy to let UK investment to take advantage of the opportunities on offer.

Buy To Let Tip: Take Your Time

Investing in buy to let is not something you should rush into. Spend enough time beforehand weighing up the pros and cons to work out whether you’re ready to invest and make this commitment, feeling fully prepared for any unexpected market changes.

Best buy to let locations


Explore the Best Buy to Let Areas

When it comes to the UK investment market, buy to let property investment can be extremely successful and rewarding. That is, however, if you choose the right rental market location. Researching the best buy to let areas to invest in is one of the most crucial steps in knowing how to build a property portfolio that works.

Certain cities and regions in the UK are considered buy to let property hotspots, while others are performing at a disappointing rate in comparison. Over recent years, the north-west region has been deemed the best place to buy to let in the UK. The north-west, home to Liverpool and Manchester, was voted one of the best buy to let areas of 2019, 2018, 2017, and beyond.

So what makes buy to let property in Liverpool and Manchester rank so highly for buy to let, and how can you identify buy to let property hotspots for yourself?

Look at Rental Yields

Now that you know more about rental yields from the last section of this buy to let guide, you’ll be able to better identify a good yield from a bad one. This is such a key part of buy to let investment, as, without high rental yields, you won’t be able to generate the kind of desirable returns you’d like.

Part of the reason why Liverpool and Manchester buy to let property investment is so popular is the rental yields. Manchester boasts average yields of 5.55 per cent, while Liverpool generates averages of 5.05 per cent.

While Liverpool and Manchester are some of the best buy to let areas for rental yields, they aren’t the only UK locations that can generate these high figures. When finding the best place to buy to let, UK city centre areas are usually a good option. In Leeds, for example, city centre postcodes such as LS3 have been known to boast yields of 9.28 per cent on average. City centre property investments usually perform highly when it comes to buy to let yields, as they’re more in demand, which means average rents are higher in cost.

Whenever you decide on an area you’d be interested in investing in, take some time to research the average rents and rental yields for the area. If you have the information available, you should also work out potential yields for your particular investment by investigating the costs of average rent. Without doing this, you’re missing out on getting the most out of your buy to let property investment.

Buy to let guide

Consider Tenant Demand

Tenant demand is a huge part of the decision-making process when finding a property in the best place to invest in property. UK cities have seen a shortage of properties available to meet levels of demand, especially from younger tenants such as students and young professionals. Today’s young people are struggling to buy their own home, which means they’re renting for longer periods. Without demand from those who need to find a rental property, your buy to let venture would suffer from void periods and, most likely, low yields.

If you’re looking to find a buy to let property for sale in one of the best buy to let areas, Manchester is a great city to explore when it comes to demand. Manchester has an ever-growing population, with over 80,000 students, and an overall population of more than 531,470 people. This high demand has played a big part in Manchester’s recent rise in rental costs, resulting in a 5.76 per cent growth.

To find out whether the area in the UK that you’re interested in for buy to let investment has good levels of demand, you should look into population statistics. This kind of information can be easily found online. For example, details on student numbers are offered by the university websites for each city which will help you find out the best place to buy to let student accommodation.

If a city’s population statistics suggest significant long term growth over the years, along with a high population of young people, this could be a good indication that levels of demand will be high.

Highest Rental Yields

Think About Capital Growth

While rental returns are the main attraction of buy to let investment, when thinking about how to buy to let in the UK, investors should also incorporate capital growth. Capital growth, otherwise known as capital appreciation, is the growth in value of a property over time.

As touched on in the last section of this guide, high capital growth can benefit buy to let investments if the investor chooses to sell their property further down the line. This way, if the property has seen an increase in value, the investor will receive a return on their investment due to earning more for the property than the price they initially paid.

When you’re looking for the best buy to let areas, remember to factor in the potential for long-term investment capital growth. Areas with a high level of growth are usually those with big regeneration schemes underway. Regeneration is when plans are made to improve a city by redeveloping it, either through transforming current attractions or introducing new ones.

A good example of recent UK regeneration is that seen by Liverpool, which has included schemes such as the £1 billion Liverpool One development. Completing in 2008, Liverpool One played a big part in the city’s economic growth and still thrives today as Liverpool’s most popular shopping centre. Future plans for the city include schemes like Liverpool Waters and the redevelopment of the Everton football club stadium.

When you look at house prices in Liverpool over the years, it’s evident that regeneration in the city has positively impacted capital growth and led to the city’s reputation as one of the best buy to let areas in the UK.

The north-west is the UK’s leading region when it comes to capital growth. From July 2017 to July 2018, house prices in the north-west showed an increase of 5.6%. The UK experienced an average growth of 3.1% during the same period, which shows that the north-west region is exceeding expectations and leading the way as one of the biggest buy to let property hotspots in this regard.

House price growth is perhaps the main factor that puts people off the option to invest in buy to let London property, with the area seeing negative growth over the years compared to other UK cities. The only area of the capital which seems to have seen growth when it comes to London property prices is North London, with the average selling price having grown by 5.60 per cent in the year to November 2018, exceeding other areas like South and East London.

If you want to make the most out of your investment in buy to let property and benefit from not just rental returns but also high returns later in life, make sure you take some time to consider the capital appreciation prospects in your area of interest. Look at the average growth rate in both the city and the region as a whole, and take into account any regeneration plans that are in place.

Top Buy To Let Tip: Use Online Tools to Help you Choose the Best Buy to Let Areas

Did you know that you can use specialist online tools to help you work out the best buy to let areas for UK property? Go Compare have their very own tool allowing you to compare two UK cities and take note of statistics like average house prices, rental cost growth, average yields and more. A bespoke blinds and shutters brand, Thomas Sanderson, has also created a buy to let property hotspots tool, which lets you see the average rental yield of each postcode in each different city and identify areas which may be a risk to invest in.


Before going ahead with a buy to let investment, you should always weigh up the benefits against the risks to work out if this is the right venture for you.

Property Investment Tips


Look at Different Buy to Let Strategies

Buy to let comes with a choice of different strategies to consider for your investment. While the most popular option is to rent buy to let investment properties in the form of a house or apartment, there are different strategies you should consider. When buying a property, buy to let strategies will involve both the property type itself and your target tenant. Here are the most popular strategies to consider before buying property to let.

Consider Student Buy to Let Property

Student buy to let property investment is one of the most popular UK ventures. Many investors are attracted to buy to let student property due to low prices, high demand, and impressive yields. The UK is home to some major universities which have helped to increase the student population dramatically. The student population in the UK reportedly stood at 2.3 million in 2017 and 2018, including a large proportion of overseas students.

The buy to let student market has changed over recent years and luxury student accommodation has grown into a more common and attractive investment. Students now want more from their accommodation while property searching. Instead of living in cramped shared housing, students today crave spacious studio apartments. Rather than relying on their library WiFi to complete projects, students now favour a high-speed internet connection in their rental properties.

Because there’s a demand for this type of property, investors can take advantage of this by buying a buy to let student property with higher average rental costs to allow for more attractive yields. Other features that will attract students to your buy to let accommodation include proximity to university campuses, on-site security and maintenance, and modern designs and furnishings.

Residential Property Investment Tips

Think About Buying a Residential Apartment

You might not want to rent your buy to let property to students, and wish to find information on how to buy to let your property to alternative tenants. In this case, you should consider residential investments. Residential apartments are perhaps the most popular type of buy to let investment in the UK. This makes a lot of sense when you consider the fact that young professionals make up a large proportion of tenants. Think about it – if you’re a young professional looking for a rental property, it’s likely that you’d rather rent a city centre apartment instead of a suburban house.

Many young renters are saving for a home of their own or want a chance to experience city life without committing to homeownership, which is why the demand for residential apartments is so high. When you compare buy to let student property with residential property, the main difference tends to be the price. Residential apartments are usually more costly than student investments, but can still be highly affordable depending on the area. In Liverpool, a buy to let property with RWinvest could cost you from as little as £94,950, complete with rental yields of 7 per cent.

If you do decide to choose a residential apartment for your buy to let venture, remember to factor in the area. Focus on finding properties in up and coming areas, with a lot of potential for growth. Not only will this help you find tenants fast, but it could also improve your chances of long-term capital appreciation. A good example of an area like this is the Baltic Triangle in Liverpool. The Baltic Triangle has become a major buy to let hotspot, labelled one of the UK’s trendiest neighbourhoods and set to see millions of pounds worth of regeneration.

HMO Investment Tips

HMO Investments

A House in Multiple Occupation (commonly known as an HMO), is a property which is rented out to more than one household of tenants. This would often mean that an investor has purchased a large house containing multiple bedrooms, allowing separate tenants to rent rooms to live in. A common example of an HMO type property would be a shared student house, where a group of tenants rent bedroom space in a property but share facilities like a bathroom and kitchen.

The main benefit that draws certain investors to HMO’s is the ability to generate large cash flow. Depending on the initial purchase price of the property and the amount that each tenant is paying in rental costs, choosing an HMO for your buy to let investment could result in some attractive rental yields. However, purchasing an HMO property is usually a lot more costly, and since tenants are sharing housing with other people, they’re unlikely to be spending large amounts on their rent compared to if they were living in more private accommodation. A lot of people often turn away from HMO investments due to more time-consuming management, having to stay on top of multiple tenancies at once. There are also restrictions on HMO’s, so it’s essential to look into this if you’re interested in making this kind of investment.

Hotel Investment

Hotel Investments

Hotel investments are another choice for those who aren’t interested in traditional buy to let properties but want to take advantage of buy to let returns. With this type of investment, you would purchase a room in a hotel in order to benefit from rental returns in the form of the fee paid by people staying in the hotel.

Those who are interested in buying property to let but don’t want to commit to purchasing an entire property will often be drawn towards hotel investments. Advantages of investing in a hotel for buy to let purposes include the potential to make large returns if the costs of hotel stays are high. However, these returns would only be possible if your hotel room generated a lot of interest and demand. When you own a rental property, you usually have guaranteed tenants for a minimum tenancy period of 6 months or so, but with a hotel room investment, people may only stay one or two nights and you could be left with long void periods. Another disadvantage of this type of buy to let investment is the level of risk involved. Since a hotel is a business, it’s at risk of potentially failing and leaving you back to square one.

What is the Best Investment for a First Time Buyer Renting out Property?

The most popular option for a first-time buyer renting out property is usually student buy to let. This is because student properties are usually cheaper to purchase and come with high yields, making them ideal for those just getting started with property investment.

Top Tip: Know Your Tenant

Knowing and understanding your tenant is a key element of buy to let investment. Before you make the final decision on which property type you’re going to target for your investment, one of the biggest buy to let tips is to get to know your tenant a little better. When you get into the mindset of your potential tenant, you’ll gain a better insight into the features and qualities that they favour in a rental property. A lot of the time, taking time to do this before you find tenants can be the key in how to buy to let successfully.

For instance, imagine your ideal tenant is a young professional couple in Manchester. Think about their main requirements for their rental, which could include proximity to both their workplaces, good transport links, a modern and stylish design, and amenities such as an onsite gym, which make life easier for those with a busy lifestyle. Identifying these things will help you make a more informed and well-rounded buy to let investment.

Off Plan or Refurbished Property Tips


Choose Between Off-Plan or Refurbished Properties

Along with choosing whether you want to purchase a student or residential property, you should also ask yourself – should I invest in buy to let in the form of an off-plan or refurbishment property? These are the main two types of buy to let property available, and each comes with their own pros and cons. So what do each of these terms mean?

What is an Off-Plan Property?

An off-plan property is a property which hasn’t been completed yet, meaning it is purchased while ‘off the plan’. The investor will buy an off-plan buy to let property without seeing the finished outcome. This could mean that the property is still in the planning stages, construction has only just begun, or it may be on the way to completion.

What is a New Build Property?

The definition of a new build is in the name – it’s a property which has been newly built within the last couple of years. New builds are sometimes defined in different ways, and some people class a new build as a property that’s been built in the last one or two years, while others consider a property a new build if you or your tenant is the first to live in it. It’s for this reason that off-plan properties and new builds are often grouped together.

What is a Refurbishment Property?

A refurbishment property is a property which has been refurbished and updated. These type of projects are usually pursued by those interested in becoming a property developer. With buy to let, this usually means period properties which have been renovated and turned into modern apartments.

Off Plan Investment


Choose Between a Hands-On or Hands-Off Investment

Along with choosing whether you want to purchase a student or residential property, you should also ask yourself – should I invest in buy to let in the form of an off-plan or refurbishment property? These are the main two types of buy to let property available, and each comes with their own pros and cons. So what do each of these terms mean?

What is an Off-Plan Property?

An off-plan property is a property which hasn’t been completed yet, meaning it is purchased while ‘off the plan’. The investor will buy an off-plan buy to let property without seeing the finished outcome. This could mean that the property is still in the planning stages, construction has only just begun, or it may be on the way to completion.

Does Buying Buy to Let Property Through a Company Make it a Hands-Off Investment?

If you’re buying buy to let property through a company, you’ll often be provided with the option to leave your investment in the hands of a trusted management company. At RWinvest, we work with only the best property management companies to make sure our investors are getting the most out of their venture. Of course, it isn’t necessary to choose a hands-off investment, as you also have the choice to manage the property yourself if you prefer.

What are the Benefits of Using a Property Management Company?

There are different benefits that come with using a property management company. One of the main advantages is the fact that you’ll have more freedom to maintain your career, travel, or enjoy other commitments without having to worry about maintaining your rental property. You’ll often also be met with a higher-quality of tenants due to detailed tenant screening processes carried out by the management company.

Top Buy to Let Tip: Work Out Whether You Have Time For a Hands-on Investment

If you’re unsure whether you should choose a hands-on or hands-off investment when buying property to let, spend some time thinking about the option that would work best for you. You should be realistic with this, and work out whether you would have actually have the free time needed to successfully manage a hands-on investment. If you’re still unsure of this, you can always enquire with either our offices or a property management company of your choice and discuss your options.



Get Buy to Let Mortgage Advice

Many people who invest in the UK buy to let market opt to use a buy to let mortgage to help them with the costs of buying a buy to let property. While some circumstances don’t allow you to use a buy to let mortgage, many investors find a buy to rent mortgage necessary in order to meet property payments. Whether you plan on using one or not, these types of mortgages make up a big part of many people’s investment journey. Find out more with this buy to let mortgage guide.

What is a Buy to Let Mortgage?

A buy to let mortgage is a loan agreement that’s specifically tailored to those purchasing a rental property. A buy to let mortgage in the UK works in a similar way to a regular residential mortgage. The main difference, apart from the property type, is that buy to let mortgage rates and interest fees tend to be higher.

How Much Mortgage Deposit is Needed When Buying a Buy to Let Property?

Your buy to let mortgage deposit will usually be a minimum of 25 per cent of the property value, but this can vary between 20 to 40 per cent depending on the individual mortgage. For example, if your property value was £120,000, you’d need to pay a deposit of at least £30,000 as the cheapest buy to let mortgage deposit.

What are the Buy to Let Mortgage Rules?

There are usually certain buy to let mortgage rules and criteria that you need to meet. For instance, to get a buy to let mortgage, you need to already own your own home, have a good credit record, and earn over £25,000 a year.

Buy to let guide

Certain lenders will have different rules, but these are normally the main criteria that are required before a mortgage provider approves you for a buy to let mortgage. This means that if you’re a first-time buyer, a buy to let mortgage isn’t an option, so you’ll need to explore alternative ways to purchase the property.

Some lenders also have age limits for their mortgages, with a typical age limit of between 70 or 75, meaning that your mortgage payments must end by the time you reach this age.

Certain property types, such as off-plan properties, are difficult to purchase with a buy-to-let mortgage. Those who want to obtain a mortgage for a rental property will struggle to do so with off-plan investments. Because mortgage lenders will typically only guarantee the amount they’re going to lend for up to six months, they’re unlikely to agree to fund an off-plan investment in case the development doesn’t complete within this time.

What if I Don’t Use a Buy to Let Mortgage?

If you don’t want to use a buy-to-let mortgage, you can always pay off your property investment fees in full. If you have the money to do so, this may be the easier option, as you won’t have to worry about keeping up with mortgage repayments and possible rising mortgage rates further down the line.

Top Buy To Let Tip: Speak to a Buy to Let Mortgage Advisor

Deciding whether or not you should use a mortgage for your buy to let property is an important part of your investment journey. While we’ve tried to provide you with as much information as possible on the basics of buy to let mortgages, you should also seek out the help of a mortgage advisor. This way, you can get first-hand top tips and buy to let mortgage advice on things like mortgage repayments, types of mortgage and finding a mortgage provider, and get immediate answers to any questions you have.


Please note, although we are a property investment company, we do not specialise in buy to let mortgages, nor do we allow these to be used when buying our investment properties. The information we’ve referenced in this section of our buy to let guide was taken from multiple sources, such as Money Advice Service. If you want to know more about buy to let mortgages, please seek the help and personal advice of an expert, who can guide you through your available options and help you find the best mortgage provider for your needs.

Property Investment Tax


Learn About Buy to Let Rules and Taxes

When you purchase a buy to let property, there are certain rules you need to follow and taxes that need to be paid. Tax rates on buy to let property can differ depending on the type of tax involved. The tax implications of buy to let property can sometimes turn people away from the idea of buy to let, which is why it’s so important to educate yourself on the potential fees involved before making any big decisions. From stamp duty to legal obligations, here are some important things you should know.

What Legal Responsibilities Will I Have as a Buy to Let Investor?

Buy to let comes with certain legal requirements that investors need to follow regarding tenancies. Whenever you find a resident for your buy to let property, you need to create a written tenancy agreement which must be signed before the process moves forward. This is essential as it ensures you have full control of both yours and your tenant’s rights, avoiding any issues from arising.

One common agreement is that tenants will pay a deposit before they move into the property which they’ll get back at the end of the tenancy. When this happens, the deposit must be stored in a protected Tenancy Deposit Scheme. Your investment property should also be completely safe for tenants to live in, so make sure the gas and electrics are safety compliant.

Capital Gains Tax on Buy to Let Property

One of the biggest taxes that buy to let investors need to pay is capital gains tax. Capital gains tax is a tax on any profit you make from the sale of an asset. This applies to buy to let, so when selling a buy to let property, capital gains tax should be expected. In fact, the capital gains tax when selling buy to let properties is actually higher for landlords, with tax rates on buy to let property of 18 per cent for basic-rate taxpayers and 28 per cent for additional rate taxpayers. The amount you’ll pay for capital gains tax on a buy to let property sale will differ depending on the price of the property.

stamp duty calculator

Stamp Duty Tax Rules on Buy to Let Property

Since April 2016, it became a law that those purchasing a second home must pay a stamp duty tax on properties worth over £40,000. Therefore, this will apply to you if you currently own your own home and are buying an additional property for buy to let purposes. You also need to pay stamp duty whether you own a freehold or leasehold property. You can use a stamp duty tax cost calculator to work out how much this could cost you for your buy to let investment. As a rule of thumb, you’ll pay 3 per cent tax fees on properties up to a value of £125,000, 5 per cent on properties up to £250,000, and 8 per cent on values of up to £925,000.

What about Buy to Let Tax Relief?

You may be wondering whether you can claim any tax relief on buy to let property investments. Paying tax on buy to let property isn’t everyone’s favourite part of the investment process, and fortunately, it is possible to deduct some costs from your overall outgoings.

In the past, certain rules were in place which allowed investors to take advantage of significant buy to let tax relief. In more recent years, however, things have changed and a new buy to let tax system has been introduced. Let’s take a look at the possible tax relief options you should explore as a buy to let investor.

Parliament Square

Can I get Tax Relief on Buy to Let Mortgages?

Those who use a buy-to-let mortgage to pay for their rental property are able to benefit from some tax relief. While this isn’t as substantial an amount as it was in the past, it’s still definitely worth exploring if you’re looking into beginning your buy to let journey.

Before April 2017, private landlords that had a buy-to-let mortgage could deduct any interest they paid towards their mortgage payments from their full rental income amount. For instance, investors who had an annual mortgage interest payment of £9,000 and made returns of £10,000 per year through rental income would only need to pay tax on the remaining £1,000. Therefore, those in a tax bracket of 20 per cent would only need to pay a tax bill of £200.

However, since the 2017-18 tax year began, new buy to let property tax changes have been introduced on a gradual basis until plans are finalised. Following this period, the percentage of mortgage interest payments deductible from rental income has been decreasing, down 100 per cent to 25 per cent in the 2019-20 tax year. By 2020, this percentage will reach zero.

Once this happens, buy to let investors will be unable to deduct any amount of their mortgage interest payment from their rental income before paying tax. A landlord that earns £10,000 a year in rental income and pays £9,000 in mortgage interest payments will instead have to pay tax fees on the entire £10,000.

If you’re concerned about these tax relief changes, a buy-to-let mortgage might not be right for you. If you have the means to do so, it might be worth looking into purchasing your buy to let property outright.

How to Avoid Capital Gains Tax on Buy to Let Property

From April 2020, new ‘Private Residence Relief’ plans will come into place, which provide certain investors with some relief on their capital gains tax. Buy to let landlords who lived in their property before putting it on the rental market can avoid paying any capital gains tax for both the time they lived in the property and for the following nine months after moving out.

Top Buy To Let Tip: Work out Your Potential Buy to Let Costs

Now that you know about the taxes you’re likely to pay on your buy to let property, you should take some time to work out what your potential costs may be and compare this to the amount of return you expect to see from the investment. This could help you discover the best route to take on your investment journey, and decide whether or not buy to let is right for you.


The information we’ve used in this section of our buy to let guide was taken from the following sources – Simply Business and Money Supermarket. If you want to find out more about the possible tax on the sale of buy to let property or your tax on buy to let property income, consider speaking to a financial advisor or provider of financial services who can give you more in-depth guidance. For detailed and thorough legal advice, reach out to a third party solicitor who specialises in property law.

A Summary of our Top Tips for Buy to Let:

01) Get to grips with the basics of buy to let

02) Weigh up the pros and cons of buy to let

03) Research the best buy to let areas

04) Explore the different buy to let strategies

05) Consider an off-plan buy to let property

06) Choose a hands on or hands off investment

07) Seek buy to let mortgage advice

08) Learn about buy to let rules and taxes

Buying an Investment Property: Your Next Steps

Last Unit Remaining

Reliance House Studios

Premium Studio Apartments

Liverpool Prices from £107,500

7% NET Rental Return

Completes Soon

New Block Released

Parliament Square

New Luxury Property Investments

Liverpool Prices from £94,950

7% NET Rental Return

Cherry Pick New Units

Limited Units Remaining

Parliament Square The Tower

L1 City Centre Postcode

Liverpool Prices from £94,950

7% NET Rental Return

Rooftop Spa and Indoor Pool