5 Steps to Become a Buy-to-Let Landlord

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Table of Contents

Buy-to-let property investment is probably one of the market’s most well-known and profitable investment strategies – but how does someone become a buy-to-let landlord in 2023?

Here are 5 Steps to Becoming a Buy-to-Let Investor in 2023:

Understand Your Budget: Consider Buy-to-Let Landlord Costs

Before even thinking about signing on the dotted line, any would-be buy-to-let landlord must consider all the costs involved with purchasing a property.

Having a clearly defined budget at hand, first and foremost, will significantly help to offset any surprises further down the line.  Why not learn more about how buy to let property investments work with our free guide.


As you would expect, the purchase price of a buy-to-let property is likely one of the most considerable costs of becoming a buy-to-let landlord.

Many factors determine the individual price of a property, but the most pivotal is the type of property and area you choose to invest in. This means that the bulk of your attention should be focussing on the best UK areas to invest in, as well as the latest buyer trends, in order to maximise your yield.

According to the latest data from the Land Registry, average property prices in the UK are exceeding £280,000 – with the average 12-month London prices skyrocketing to over £730,000!

It’s clear then that property can sometimes come with a hefty price tag; however, depending on where you look, investors can find affordable prices in areas that produce the best yields – some on par or even higher than the capital city!

For example, properties in Liverpool and Manchester currently have average prices of around £193,473 and £250,700, respectively. Much lower than London house prices, investors can also see some impressive returns, with gross rental yields of 5.92% and 6.29%. Why not look at some of the new build developments in Liverpool for some great examples.

Whilst gross rental yields in London (around 7%) are higher than in these cities, the lack of affordability on offer makes property investment in the capital much more difficult for investors – especially for those looking at how to become a buy-to-let landlord as a beginner.

Capital appreciation for residential properties in the area is another issue, with 5-year estimates depicting negative growth of -1.2% by 2027.

Comparatively, the North West is set to see increases as high as 11.7% in the next five years – the highest rate of growth in the country.

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Maintenance Costs

Once your buy-to-let property is populated with tenants, and you’re (hopefully) beginning to see some impressive rental returns – the costs do not end there; there will be some day-to-day costs that you will need to consider, especially maintenance and repairs fees.

Many buy-to-let landlords will also seek out landlord insurance alongside taking out a mortgage. This covers property and liability protection and offers great insurance to protect investors from incurring significant financial losses.

In addition to this, a rental guarantee provides an extra layer of protection for buy-to-let landlords in case any tenants fail to pay their rent on time.

Crucially, it is the responsibility of buy-to-let landlords to ensure that properties are safe for tenants to live in.

Whether it’s fire alarms or carbon monoxide detectors, it’s vital that investors take the time to review the safety of their property on a regular basis.

A person adjusts the EPC level by turning a button

An Energy Performance Certificate (EPC) essentially ranks a property’s energy and CO2 emissions, with ratings ranging from A (most efficient) to G (least efficient).

Previous rules would have seen heavy fines for those who failed to upgrade their properties to C or above before 2026.

However, following the 2023 Eco U-Turn, landlords now have no set deadline to upgrade D-or-below-related properties. 

Whilst there is no legal requirement to increase the energy standards of properties, investors may see more tenant demand from eco-developments due to shifting attitudes towards climate change and sustainability. 

At the same time, with the next general election looming, these formerly proposed EPC rules could be reintroduced at some point in the future. 

This would require all properties – whether new-builds or not – to meet higher energy efficiency standards to be legally rented on the market.

Investors should consider investing in new-build or off-plan properties rather than purchasing an older property requiring more renovation work.

These developments are usually outfitted with the latest eco-efficient technology – such as solar panels or heat pumps – meaning that they are likely to automatically have a higher EPC rating. Whether you are thinking of investing in a buy-to-let in slough or looking at the different types of flats for sale in Liverpool, always look at the factors to consider first.

Understand Buy-to-Let Mortgages

Buy-to-Let Mortgages (as the name implies) are specifically designed for investors buying properties with the intention of renting out to a tenant.

Typically, mortgage lenders will not provide traditional residential mortgages to those intending to buy a property to rent out. This means that if you’re a buy-to-let landlord seeking a mortgage, this will usually be your primary option (aside from buying a property outright). Why not read our guide on the best things to invest in right now, to gain more insights in making the right choice.

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How do Buy to Let Mortgages Work?

Most buy-to-let mortgages are interest-only, meaning that investors will only pay the interest on the loan each month rather than paying off the amount borrowed. 

Investors will only have to repay the full capital debt (their original loan) in full when the mortgage term ends.

Unlike traditional mortgages, buy-to-let property mortgages usually see much higher fees, as well as interest rates. According to this guide to mortgage interest rates by Which.co.uk, the average fixed rate for BTL mortgages was 6.5% in July, compared to the average fixed rate for residential mortgages, which stood at 5.77%, per Rightmove.

The deposit for a buy-to-let mortgage is also typically higher than most residential mortgages, with lenders often requiring a minimum deposit of 25% or higher.

One of the downsides of BTL mortgages is that some first-time landlords may struggle to borrow, as many brokers will want borrowers to have previous experience of owning property and paying back mortgages.

Therefore, most advisors suggest that you own your own home before trying to borrow a BTL mortgage.

Who Can Get a Buy-to-Let Mortgage?

There are several buy-to-let mortgage criteria you must meet to be eligible for a mortgage.

These are:

  • BTL mortgage borrowers must earn over £25,000 a year and have a good credit score.
  • Borrowers must be no older than 70 or 75 by the time the mortgage terms end, with most lenders placing an upper age limit on their agreements.
  • Borrowers should ideally own a home beforehand (although it is possible for first-time buyers to secure a buy-to-let mortgage).

For those looking for the best way to become a buy-to-let landlord, it’s also essential to understand the risks involved with this kind of investment. Property prices are particularly susceptible to socio/economic factors, with overall value fluctuating in response. In turn, this can also have some effect on BTL mortgages.

For example, one of the reasons why the minimum deposit for these mortgages is so high is that buy-to-let properties can sometimes experience void periods. Why not learn what makes a property Investor successful in 2023 with the RWinvest dedicated property guide.

Voids periods are when a property is vacant, and a landlord is receiving no rental income. A huge issue for many investors, this reiterates the importance of finding the right investment areas with a steady stream of potential tenants.  Areas such as the student buy to let investments sector have seen a boom in recent years.  We have compiled a list of some good investments for beginners to consider.

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Learn Buy-to-Let Property Taxes

If you want to learn how to become a buy-to-let landlord, you must also wrap your head around what kind of taxes come with property investment.

The main taxes included are: 

  • Rental Income Tax
  • Capital Gains Tax
  • Stamp Duty Tax

Rental Income Tax

One of the simplistic taxes to understand, Rental Income Tax is essentially tax paid on rental returns.

Buy-to-let landlords purchasing a property will need to declare any rental income received in a Self-Assessment Tax Return.

The amount paid will depend on an investor’s personal finances, as well as the amount you earn.

Rental income is taxed at the same level as the usual income you would receive from a day-to-day job or any other typical business venture.

Capital Gains Tax

Particularly useful when looking at an exit strategy, Capital Gains Tax is a tax on any profit made from the sale of a property.

Buy-to-let landlords should expect higher capital gains tax bills when selling their properties.

From April 2023, the capital gains tax allowance was halved from £12,300 to £6,000, with this process expected to be duplicated from April 2024, and the allowance halved again from £6,000 to £3,000.

This means that when buy-to-let landlords eventually sell their properties, their tax bills will be much higher.

According to the latest research, the average landlord will pay £1,770 more in Capital Gains Tax compared to 2022.

For an in-depth look into the tax costs of buy-to-let, look at our guide to buy-to-let taxes.

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Stamp Duty Tax

If you want to purchase a residential buy-to-let property in 2023, you will have to pay Stamp Duty Land Tax (SDLT) – only if your purchase is over the threshold of £250,000 (unless you qualify for first-time buyer’s relief).

Buying a second property will see investors pay an additional 3% surcharge on the SDLT, regardless of overall property value.

This will apply to you if you currently own a home (i.e., you’re not a first-time buyer) and are buying an additional property for buy-to-let purposes.

For those investing in buy-to-let as first-time buyers, you will only pay SDLT for properties worth £425,000 or over.

You must also pay stamp duty whether you own a freehold or leasehold property

Feel free to use our stamp duty tax cost guide for a detailed rundown of the latest SDLT rates 2023.  We have created a useful guide highlighting some of the best pension funds available in 2023.

Understand the Responsibilities of a Buy-to-Let Landlord

Figuring out which kind of property to invest in, as well as the location and your finance options, are just the beginning steps to becoming a buy-to-let landlord.

From ensuring that your property is appealing to any prospective tenants to actually managing it on a daily basis – being a landlord often comes with a plethora of responsibilities.

Ensuring that your property is suitable for modern tenants is one of the major considerations to make.

Simply put, if your property isn’t attractive to tenants, then there’s a chance that overall demand will be low. This could increase the likelihood of prolonged void periods and inconsistent monthly income for buy-to-let landlords.

If you choose to be a more hands-on landlord, it will be your job to see to any and all issues that your tenants may have.

This could be a simple question or a massively time-consuming maintenance problem; no matter the enquiry, buy-to-let landlords will have to rectify this at their own cost. So whether you are looking for the best passive income in the UK or ways to invest £100,000, RWinvest are here to help and advise you.

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Decide What Kind of Buy-to-Let Landlord You Want to Be

Those that choose to take on the full responsibilities of being a full-time buy-to-let landlord can very feasibility live off the monthly rental yield as their primary source of income.

This does not mean that every investor has to abandon their current career path to own and manage their own residential property; it is entirely possible to profit from a buy-to-let investment without it having to take up all your time.

Once you have figured out what kind of investor you want to be, you can decide whether or not to consult the services of a property management company.

Companies like these can manage the bulk of the typical duties of managing a property, meaning that the weight of responsibilities is not solely on the shoulders of buy-to-let landlords.

This can often alleviate a tremendous amount of stress and is likely the best route for those unable to fully take on the time-consuming duties that come with owning a buy-to-let rental property.  Leading developers such as Legacie Developments are leading the way in creating more opportunities for buy to let investors in Liverpool.

Ready to Become a Buy-to-Let Landlord? Invest with RWinvest Today!

If you feel like you’re on your way to becoming a buy-to-let landlord, why not invest with RWinvest?

With over 18 years of extensive experience in the sector, our sales team are here to help you secure the right property investment opportunity to fit all your needs. Our team have also compiled a list of some of the top 10 safe investments to consider in 2023.

Whether you’re a complete novice, or an experienced investor looking to diversify your portfolio, we can help you discover some of the most lucrative deals available on the buy-to-let market – in prime investment hotspots like Liverpool and Manchester. Why not learn more about the rental yield for properties in Manchester with our handy guide.

Call our team today, and we’ll get you started on your buy-to-let investment journey!

Reece Pape Property Writer

Reece Pape

Reece Pape is a property writer at RWinvest. Reece is passionate about keeping property investors updated on must-have information and housing market news, utilising the latest property market statistics and data.

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