What is Buy-to-Let Property?
Buy to let (BTL) involves purchasing a property, in addition to your main residence, specifically to rent it out to tenants. Investors are attracted to buy to let properties for sale in the UK because of their potential to generate passive income through rental yields, as well as benefit from long-term property price appreciation.
In the UK market, a buy to let investment is typically viewed as a medium to long-term property investment strategy. Rental income can be reinvested to expand your portfolio, allowing for effective scaling over time. Buy to let properties are generally considered a relatively stable asset class, making them a valuable component of a diversified investment portfolio.
What Is Involved In Buy-to-Let Property Investments?
Buy to let essentially involves purchasing a property and letting it out to tenants for rental income. The aim is to ensure that rental income exceeds the property’s running costs, including maintenance, management fees (if applicable), and mortgage repayments.
When you invest in buy to let, you’ll need to cover costs such as a deposit, mortgage fees, and Stamp Duty Land Tax (SDLT). It’s important to note that buy to let properties usually attract a higher rate of Stamp Duty compared to purchasing your main residence.
Depending on the condition of the buy to let property that you choose, you may need to budget for renovations or improvements. For new-build buy to let investment properties, initial expenses are often focused on furnishings.
Finally, remember to factor in ongoing taxes such as income tax on your rental income and Capital Gains Tax when you eventually sell the property. Income tax is calculated based on your overall income, while Capital Gains Tax is applied to the profit you make when selling.
Buy-to-Let Popularity in the UK in 2025
Buy to let investment has been a significant part of the UK investment landscape for over two decades, consistently growing in popularity.
48,862 new buy-to-let loans got issued in the third quarter of 2024, worth approximately £8.6bn, which represents a 6.5% increase over twelve months. As such buy-to-let property makes it a substantial segment of the UK housing market, accounting for a significant percentage of UK households.
Currently, buy to let property remains a highly regarded investment avenue, offering the potential for attractive returns. The continued demand for rental properties in the UK, driven by factors like population growth in major cities and limited housing supply, underpins the enduring appeal of buy to let.
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What is a Buy-to-Let Mortgage?
A buy to let mortgage is a specialised mortgage product designed specifically for buy to let properties.
If you intend to rent out a property, securing a buy to let mortgage is essential.
These mortgages function similarly to standard residential mortgages, where you borrow a sum of money over a fixed term and make regular repayments.
You can learn more about buy-to-let mortgages here.
What is a Buy-to-Let Deposit?
One key difference between buy to let investment and residential property purchases is the deposit requirement. Lenders typically perceive buy to let mortgages as carrying more risk than residential mortgages, hence demanding larger deposits.
In 2025, deposit requirements can range from 25% to 40% of the property value, depending on the lender and the specific property. As with residential mortgages, a larger deposit generally translates to more favourable mortgage terms, so aiming for the highest possible deposit is advisable.
Experienced buy to let portfolio investors often utilise rental income from existing properties to contribute towards deposits for new acquisitions, facilitating efficient portfolio growth.
Read Our Buy-to-Let Investment Content
Investing in UK Buy-to-Let
We run through the entire investment process, from researching to selling a property.
Read the ArticleBuy-to-Let Property Types
What types of property are best for buy-to-let investments and how do they perform?
Read the ArticleFinancing Your Buy-to-Let
Everything you need to know about financing a buy-to-let investments with a BTL mortgage.
Read the ArticleLandlord Responsibilities
Uncover precisely what you need to do as a new or existing landlord in the UK.
Read the ArticleShort-Term Lets
We’re increasingly seeing landlords shift to short-term letting. But what is a short-term let?
Read the ArticleApartments vs. Houses
Unveil the pros and cons of investing in houses vs. apartments.
Read the ArticleWhat Taxes Are Involved in Buy-to-Let Investments?
Understanding the tax and financial implications is crucial for successful buy to let investment. Several taxes apply to buy to let properties, and these can vary based on your individual financial circumstances. Key taxes to consider in 2025 include Income Tax, Capital Gains Tax, and Stamp Duty Land Tax.
Income Tax
Income Tax is payable on your rental income and is calculated based on prevailing income tax rates, taking into account your other income sources.
In 2025/26, the personal allowance remains at £12,570.
- Basic Rate: For income between £12,571 and £50,270, the income tax rate is 20%.
- Higher Rate: For income above £50,271, the income tax rate is 40%.
- Additional Rate: The additional rate of 45% applies to income exceeding £125,140.
Capital Gains Tax
Capital Gains Tax (CGT) is applicable when you sell your buy to let property. It’s levied on the profit (capital gain) you make, which is the difference between the sale price and the original purchase price.
CGT rates depend on your income tax band:
- Basic Rate Taxpayers: Pay 18% CGT on property profits.
- Higher and Additional Rate Taxpayers: Pay 28% CGT on property profits.
Find out more about Capital Gains Tax here.
Stamp Duty Land Tax
Stamp Duty Land Tax (SDLT) is a significant consideration when purchasing buy to let properties for sale UK in England and Northern Ireland. The SDLT rates for buy to let investment differ from those for primary residences and have changed in 2025.
SDLT Rates from April 1st, 2025 (for additional properties like buy-to-let):
| Property Value | SDLT Rate (including surcharge) |
|---|---|
| Up to £125,000 | 5% |
| £125,001 to £250,000 | 7% |
| £250,001 to £925,000 | 10% |
| £925,001 to £1.5 million | 15% |
| Above £1.5 million | 17% |
Important SDLT Considerations for Buy-to-Let in 2025:
- Surcharge: The rates above include the 5% surcharge for additional properties (which includes buy to let investments). This surcharge applies if you already own a property.
- Overseas Buyers: Non-resident buyers may face an additional surcharge on top of these rates of 2%.
- Main Residence Replacement: If you are replacing your main residence, and sell your previous main residence within 36 months of purchasing the new property, you may not have to pay the additional 5% SDLT surcharge.
Example of SDLT Calculation for Buy-to-Let in 2025:
Let’s say you are purchasing a buy to let property for sale UK for £300,000 in April 2025. The SDLT calculation would be:
- 5% on the first £125,000 = £6,250
- 7% on the next £125,000 (£125,001 – £250,000) = £8,750
- 10% on the remaining £50,000 (£250,001 – £300,000) = £5,000
Total SDLT = £20,000
It’s crucial to use a Stamp Duty calculator and seek professional advice to determine the exact SDLT liability for your buy to let investment.
What is Stamp Duty Land Tax?
When it comes to buy-to-let investments, there’s a lot to consider. Not only do investors need to think about their own finances, but there’s also a wealth of taxes that could apply.
Paying Stamp Duty Land Tax is a legal requirement, but what actually is it?
It’s one of many taxes you will need to prepare for when looking for their first – or next – property investment, one that needs to be paid at the start of the investment journey.
With normal band rates, additional property charges and an overseas surcharge to consider, it’s worth knowing where you stand on your investment before taking the plunge.
You can find out more about SDLT in our blog which you can view below.
Read our Buy-to-Let Investment FAQ’s
Is buy-to-let a good investment?
If you were to measure how ‘good’ a buy-to-let investment is based on its past performance, this asset would probably come out on top. However, different assets will suit some more than others based on their financial goals.
If you’re looking for a resilient asset that can offer a passive income as well as the opportunity for capital growth, buy-to-let property could be the best asset for you.
With JLL suggesting that UK property values could see a cumulative boost of 17.6%, and a rental price boost of 18.8% until 2028, forecasts suggest that buy-to-let property could be the route to financial freedom for many investors.
Is buy-to-let worth it?
When it comes to investing there’s generally no ‘one size fits all’ approach and buy-to-let property will suit some investors more than others.
However, for those who are looking for a long-term investment asset with a track record of competitive growth and more price increases on the horizon, buy-to-let is often the best option.
Buy-to-let is a flexible investment assets and can offer diversification across a wider portfolio. It’s historically one of the most stable assets and is much less exposed to external factors, plus it’s a physical asset, which makes it appealing with certain investors.
The answer to ‘is it worth it?’ depends entirely on how you use it. If you use it as a long-term asset, it’s proven to be a potentially lucrative investment vehicle that can be scaled effectively.
How does buy-to-let work?
Buy-to-let is fairly self-explanatory – it involves purchasing a property with the intention of letting it to a tenant for a monthly fee.
Owning a buy-to-let property comes with a wealth of responsibilities, some of which are compulsory and some depend on how much of an active investor you are.
Being a landlord, you will be responsible for maintaining your rental property, unless you choose to go with a property management company.
Similarly, you’ll be required to find your own tenants and market the property yourself, unless you work alongside a letting company.
Can a first-time buyer purchase a buy-to-let?
First-time buyers are eligible for a buy-to-let mortgage, but with far less experience in the property market than existing landlords, there will be typically less lenders to choose from.
The majority of lenders offering buy-to-let mortgages ask applicants to have owned a residential property for a certain period of time, with an existing residential mortgage acting as ‘reassurance’ for the lender providing the buy-to-let mortgage.
How much is a deposit for buy-to-let property?
Deposits for buy-to-let property can vary, but 25% of the property’s value is usually the industry standard.
That said, deposits can range from 20%-40% depending on an individual’s circumstance and product.
While cash investors will be able to cover the entire cost of the property or land, those who plan on getting a buy-to-let mortgage for the remainder of this amount will generally need at least 20% of the entire cost to secure the property.
Do I pay stamp duty on buy-to-let?
Yes, Stamp Duty Land Tax (SDLT) is mandatory for buy to let properties in the UK (England and Northern Ireland) exceeding the £125,000 threshold in 2025.
The temporary Stamp Duty holiday has ended, and standard rates apply, with the threshold now at £125,000.
Buy to let investments are subject to an additional 5% Stamp Duty surcharge on top of the standard rates. Overseas buyers may also face an additional surcharge.
Stamp Duty Rates from April 2025 (Including Additional Property Surcharge):
| Property Value | SDLT Rate |
|---|---|
| Up to £125,000 | 5% |
| £125,001 – £250,000 | 7% |
| £250,001 – £925,000 | 10% |
| £925,001 – £1,500,000 | 15% |
| Above £1,500,000 | 17% |