Buy to Let

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Buy-to-let is pretty much what it sounds like – you buy a property in order to rent it out to tenants. You should consider the property a medium to long-term investment.

A buy-to-let property investment may be right for you if you:

  • What is a buy-to-let property investment?
  • How does buy-to-let property investment work?
  • Risk and return
  • Access to your money
  • Charges
  • Are buy-to-let property investments safe and secure?
  • Tax
  • If things go wrong

A buy-to-let property investment may be right for you if you:

  • Prefer investments that feel more tangible than stocks and shares
  • Are willing to tie up your money for a long period of time
  • Understand property prices can go down as well as up
  • Are willing to take the risk that you may not earn a profit on your investment
  • Understand and accept the additional risks that go along with borrowing money to buy a property
  • Understand and accept the costs and time involved in owning and running a property and the impact that this will have on your potential return

What is a buy-to-let property investment?

Buy-to-let investment is very different from owning your own home. When you become a landlord, you’re effectively running a small business – one with important legal responsibilities.

How does buy-to-let property investment work?

To buy a residential property, you can use your own cash or take out a buy-to-let mortgage with a cash deposit.
Keep in mind that a mortgage comes with risks – if you need to sell the property for a loss, the sale price may not cover all that you owe on the mortgage. You would need to make up the difference. Also remember, that if your tenants leave and there is no rent coming in, you still need to make your mortgage repayments.

Buy to let Mortgages

Once you buy a property, you can potentially earn a profit in two ways:

  • Rental yield – what your tenant(s) pay in rent, minus any maintenance and running costs, like repairs and agents fees.
  • Capital growth – the profit you earn if you sell your property for more than you paid for it.

See Stamp Duty Calculator for stamp duty fees.