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Your Buy to Let Property Guide

Our buy to let article is a quick and simple guide for landlords on what you need to know when purchasing a rental property.
It is important you understand the key differences between residential and non-residential properties when it comes to tax, mortgages, and selecting the right property for your property plans.

Buy to Let – Stamp Duty

LBTT replaced UK Stamp Duty Land Tax in Scotland on 1 April 2015. LBTT (Land & Buildings Transaction Tax) is a tax applied to residential and non-residential land and buildings transactions.  You can find out how much tax you will have to pay using an LBTT calculator for properties in Scotland.

Land and Buildings Transaction Tax (LBTT) is paid at different rates depending on the purchase price.
Properties under £40,000 are not subject to Additional Dwelling Supplement (ADS) but if ADS is due it is payable on the total purchase price.

bBuy to Let Mortgages

Buy-to-Let (BTL) mortgages are for landlords who want to buy property to rent it out. The rules around BTL mortgages are similar to those around regular mortgages, but there are some key differences. One key difference that we have found amongst the majority of lenders is that you must earn £25,000+ a year.  If you earn less than £25,000, you might struggle to get a lender to approve your buy-to-let mortgage.

Key differences between buy-to-let mortgages and ordinary residential mortgages are:

  • Interest rates on buy-to-let mortgages are usually higher
  • The minimum deposit for a buy-to-let mortgage is usually 25% of the property’s value
  • Most BTL mortgage lending is not regulated by the Financial Conduct Authority (FCA)
  • Most BTL mortgages are interest-only. This means you pay the interest each month, but not the capital amount therefore at the end of the mortgage term, you repay the original loan in full. BTL mortgages are also available on a repayment basis.

Moneyhelper provides a mortgage calculator which will give you an indication of the monthly mortgage payments. All you need is the property price to get started.

Selecting the right rental property

When you are considering a BTL property, it is important to consider what kind of tenant it may attract and how in demand that property is. We have created an article on 7 things you should consider before purchasing a rental property that will help you select the right property for your property plans.

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Credit: Which & Money Helper for further information and providing calculators in links attached.

Bridge Letting is managed by, Owner and Director, Samantha Finlay. Samantha has a wealth of knowledge and experience in both Personal & Business Banking, Residential & Buy-To-Let Mortgages, and Property Management.

If you know anyone who is considering buying a rental property, looking to let out their property, or switch their current letting agent then please put them in touch with us today and you will both receive a £125 cash reward! 

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