Thinking about becoming a landlord? Whether you’re dreaming of a single rental property or building a mini property empire, getting started can feel like a maze of jargon, deposits, and tax talk. But don’t worry — we’re here to break it all down in plain English.
Let’s explore how Buy to Let mortgages work, what changes if you buy through a limited company, and what costs (like stamp duty) you’ll need to factor in. Plus, we’ll share some tips on growing your portfolio without losing sleep.
What is a Buy to Let mortgage?
A Buy to Let (BTL) mortgage is designed for people who want to buy a property and rent it out. Unlike a regular residential mortgage, lenders look at the potential rental income rather than just your salary.
Key things to know:
- Most BTL mortgages are interest-only, meaning you only pay the interest each month (not the loan itself).
- You’ll need a minimum deposit of 25%, though some lenders might ask for more depending on the property and your circumstances.
- Your expected rent usually needs to cover 125%–145% of the mortgage payments, tested at a stress rate of around 6–7%.
Some Buy to Lets are not regulated by the Financial Conduct Authority
Buying through a limited company: what’s the deal?
More landlords are choosing to buy properties through a Limited Company (Ltd) — often set up as a Special Purpose Vehicle (SPV) just for property investment.
Why go Ltd?
- You can deduct mortgage interest as a business expense (a big win for higher-rate taxpayers).
- You’ll pay corporation tax (currently 19–25%) instead of income tax on rental profits.
- It’s easier to reinvest profits and pass properties on to family.
Things to keep in mind:
- Mortgage rates for Ltd companies can be slightly higher.
- You’ll need to provide personal guarantees as a director.
- Setting up and running a company comes with admin and costs.
Stamp Duty: the extra costs you need to know
If you’re buying a second property (which includes most Buy to Lets), you’ll pay extra stamp duty.
As of 2025, here’s how it works:
- 5% on the first £125,000
- 7% on £125,001 to £250,000
- 10% on £250,001 to £925,000
- 15% on £925,001 to £1.5 million
- 17% on anything above £1.5 million
So, buying a £300,000 rental property could mean a stamp duty bill of around £20,000. Ouch — but it’s better to know upfront!
Building your property portfolio: start small, think big
You don’t need to buy five properties at once. Start with one, learn the ropes, and grow from there.
Top tips for portfolio success:
- Define your goals: Are you after monthly income or long-term growth?
- Research locations: Northern cities often offer better rental yields.
- Track your finances: Use spreadsheets or property management tools.
- Treat it like a business: Whether you buy personally or via a Ltd company, think long-term.
Final thoughts
Becoming a landlord isn’t just about buying bricks and mortar — it’s about building a strategy that works for you. Whether you go solo or set up a company, understanding the basics of Buy to Let mortgages, stamp duty, and deposits will help you make smart choices.
And remember, you don’t have to do it alone. We are here to help you navigate the journey, from your first property to your tenth.