Buy To Let Property Investment Guide - Top UK Investments in 2025

First things first, what is buy-to-let? Buy-to-let investing is when you use investment properties to earn additional income. You make money from buy-to-let in two main ways:

Rental income which you collect from tenants who live in your properties. This gives you a consistent stream of passive income every month.

Capital appreciation/growth, which is a term referring to the price growth a property sees over time. You can make a profit from this by selling your buy-to-let property after the price has risen.

This way, you get two different income streams from one investment, allowing you the benefits of both regular monthly income and also a large payout, making buy-to-let a good investment for many.

Let’s continue to explore the definition of buy-to-let and the basics of these investment properties in a bit more detail.

What is Buy-to-Let Property?

A buy-to-let property is a property that has been purchased by an investor to be let out to tenants.

Buy-to-let investors buy a property and make money from the rent paid by their tenants. When buying a property to let, you can either purchase it outright or with a buy-to-let mortgage.

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 to generate regular income.

Buy-to-rent is simply an alternative piece of terminology that’s often used and has the same meaning as buying a property to let.

What are Rental Yields?

Rental yields are a percentage that indicates the return on investment you can expect from a buy-to-let investment property.

A rental yield of 5-6% or above is often considered desirable, and when looking for a buy-to-let opportunity, rental yields are one of the main things investors focus on.

Can You Live in Your Buy-to-Let Property?

When you buy a property for buy-to-let purposes, it’s not usually possible to live in the property.

This is because many investors will use a buy-to-let mortgage to pay for their purchase, and the majority of mortgage lenders and mortgage broker’s deals don’t allow this.

However, those who purchase a buy-to-let investment property without seeking a mortgage deal are free to live in their property if they please.

Learn more about the question ‘Can I live in my buy-to-let property?’ with our helpful guide filled with information.

It’s normal to find yourself wondering, ‘How does buy-to-rent work?’, especially when you’re new to the concept.

In a nutshell, the concept of buy-to-let works in three steps:

1. The investor purchases the property of their choice from an estate agent or property investment company.
2. The buy-to-let investor finds a tenant who will agree to pay the regular monthly rental instalments.
3. The investor receives a return on investment through rental payments.

Of course, you’ll also need to know about the process of actually buying your buy-to-let property, as well as things like buy-to-let mortgages and taxes on buy-to-let purchases.

You’ll find more information on those elements throughout this article.

You can also visit our how to buy a buy-to-let property directly to get started.

If making money is on your mind, consider reading our how to make money from property blog next.

One of the most common ways investors purchase a buy-to-let property is by using a buy-to-let mortgage.

These differ from traditional residential mortgages as you pay back the interest you accrue during the term of the mortgage rather than the amount you have borrowed. You only pay back the money you’ve borrowed at the end of the mortgage’s term.

Buy-to-let mortgages also have a higher initial deposit than traditional mortgages, with most requiring around 25% of the property’s cost as a down payment instead of the usual 10%.

Interest rates on these mortgages are also higher, so you will have to pay a higher rate than you would for a traditional residential mortgage.

Learn more about buy-to-let mortgages and figure out your potential mortgage payments easily through our Mortgage Calculator page.

You can also see how much rent you would need to make to cover a buy-to-let mortgage, through our Rental Income Calculator.

If you want to achieve high returns from a buy-to-let property investment, an important factor to consider is where you want to invest.

The best areas to invest in have a combination of high rental yields, affordable property prices and a high demand from tenants looking for rental properties, and generally, major cities are a good place to start looking.

Liverpool and Manchester are widely considered the two best cities to invest in, as both have high rental yields and affordable prices. Liverpool has an average rental yield of 7.44% according to Zoopla, which is far above the UK average of 5.60%.

Other cities like Sheffield, Nottingham and Birmingham are also solid options due to the affordable prices and high demand from tenants that these cities have.

For a full breakdown of the best buy-to-let areas in the UK, follow the link to read our free guide.

The main taxes included with buy-to-let property investment are:

• Stamp duty tax
• Capital gains tax
• Tax on buy-to-let rental income

While stamp duty is a tax payable when purchasing a buy-to-let property, capital gains tax is a tax on any profit you make from the sale of an asset.

This applies to buy-to-let, so capital gains tax should be expected when selling a buy-to-let property. The rate of tax you will pay again depends on the income you make.

Then there’s buy-to-let income tax, which is a tax paid on rental returns. Investors will need to declare any rent they receive in their Self Assessment Tax Return.

The rate of income tax will depend on the amount of income you receive, the same as with capital gains tax.

Click here to read our buy-to-let tax rules guide.

Buy-to-Let Properties for Sale in Liverpool

Liverpool is one of the best buy-to-let cities in the UK, with low property prices, high yields and a thriving young population looking for affordable rental property.

This North-West city is ideal for any property investor, and thanks to the major regeneration schemes that are currently underway, the future for Liverpool looks bright.

Why not consider looking at our buy-to-let properties for sale in Liverpool, to see why this city is so popular with investors?

Buy-to-Let Property for Sale in Manchester

Manchester is another city that is a key part of the Northern Powerhouse and is the fastest-growing city in the UK.

The thriving business sector and major employers located in the city make it a perfect landing spot for young professionals, and the high number of graduates who remain in Manchester post-university means that rental property is in high demand.

Our buy-to-let property for sale in Manchester always sells fast for these reasons, so consider seeing what we have to offer our clients now.

Buy-to-Let Property for Sale in Birmingham

As one of the largest cities in the UK, Birmingham property investments combine the affordable prices, high yields and large demand that all investors should be looking for.

With a high student population, a growing number of major employers located in the city and massive regeneration schemes set to transform run-down areas, Birmingham’s future looks incredibly bright.

See what buy-to-let property for sale in Birmingham we currently have in stock by following the link.

Buy-to-Let Property for Sale in London

As the nation’s capital, London is always in high demand, with thousands moving to the city for work.

Higher property prices mean you may struggle to see as strong a return on your investment as you would with other cities in the UK. Depending on where you invest though, you can still make a solid profit through rental income.

Our buy-to-let property for sale in London has proven to be popular in the past, so make sure to see what we have to offer.

Buy-to-Let Property for Sale in Luton

Just a short distance away from London, Luton is an ideal place for young professionals looking to work in the capital whilst avoiding the sky-high prices that come with it.

This also makes it a great option for property investors, who can make the most of the growing community of young professionals and more affordable prices that Luton offers.

Find out what our buy-to-let property for sale in Luton can offer you as an investor by following the link.