What Is Buy-to-Let? A Guide for UK Property Investors

2025-07-16

Buy-to-let is a popular investment strategy in the UK that involves purchasing a property specifically to rent it out to tenants. Whether you’re a first-time investor or growing your property portfolio, buy-to-let offers a way to generate rental income and benefit from long-term capital growth.

In this guide, we explain how buy-to-let works, the benefits and risks, key legal and financial considerations, and why many choose London as their preferred location.

What Does Buy-to-Let Mean?

A buy-to-let property is a residential property bought with the intention of letting it out to tenants, rather than living in it yourself. Typically, investors take out a buy-to-let mortgage, which is designed for this specific purpose and differs from a standard residential mortgage.

You can rent the property to:

Long-term tenants (assured shorthold tenancy – AST)
Students or professionals
Short-term lets, depending on local council rules

Why Choose Buy-to-Let in the UK?

The UK property market—particularly in major cities like London, Manchester, and Birmingham—has long been a stable and attractive destination for real estate investment. Reasons include:

Strong rental demand in urban areas and university towns
Capital appreciation over the long term
Regular monthly rental income
Tangible, secure asset class

Buy-to-Let Mortgages: What You Need to Know

Unlike standard mortgages, buy-to-let loans:

Usually require a larger deposit, often around 25%
May be interest-only, meaning you pay off the interest monthly and repay the capital at the end of the term
Are assessed based on rental income potential, not just your personal income

Mortgage lenders typically require projected rental income to cover 125–145% of the mortgage payments.

Key Responsibilities of a Buy-to-Let Landlord

Investing in buy-to-let is not just about earning income—it also involves legal and financial responsibilities:

Gas, electrical, and fire safety checks
Protecting the tenant's deposit in a government-backed scheme
Complying with Right to Rent checks (UK residency status)
Obtaining a landlord licence in some boroughs
Keeping the property well-maintained and habitable

Hiring a professional letting agent like Crown Home Buying and Letting can ensure your obligations are met efficiently and compliantly.

Tax Considerations

Buy-to-let landlords must account for several tax elements:

Stamp Duty Land Tax (SDLT): 3% surcharge on top of standard SDLT rates for additional properties
Income Tax: Rental income is taxed after deducting allowable expenses (e.g. letting agent fees, insurance, maintenance)
Capital Gains Tax (CGT): Applies when selling a buy-to-let property that has risen in value

Consulting a tax advisor before purchasing is strongly recommended.

Is Buy-to-Let Still a Good Investment in 2025?

Despite evolving tax rules and higher interest rates, buy-to-let remains a strong investment vehicle, especially when approached strategically. Properties in prime London zones still attract strong tenant demand, international appeal, and high yields.

Working with an experienced buying agent ensures you make informed choices, choose properties with growth potential, and remain fully compliant with current regulations.

Ready to Buy an Investment Property?

At Crown Home Buying and Letting, we specialise in helping investors navigate the UK property market—from identifying high-yield developments to securing tenants and managing your property.

Our team offers: