Buy-to-let property investment guide for investors

September 1, 2021



The notion of buy-to-let in the United Kingdom is straightforward. You buy a suitable home that can be rented out to tenants for a set monthly rental fee. Not only will this offer you a steady stream of passive income, but you will also profit from any property appreciation. You become a landlord when you enter the realm of buy to let, which means you now have a lot of legal responsibilities. Because the safety of your tenants is paramount, you will need to follow all applicable rules and regulations. You must make certain that any house you rent out is completely secure.

When you purchase a buy-to-let property, you may need to make some renovations. Even if there isn't one, you'll still need a gas safe certificate, an electrical installation condition report, an EPC, a fire alarm, and a carbon monoxide detector to comply with current standards.

Buy-to-let in 2021

The number of households in the private rented sector in the United Kingdom increased by 1.7 million (63 percent) from 2.8 million in 2007 to 4.5 million in 2017. So, according to all property experts, including estate agents in Claygate, they strongly opine that buy to let investment is still a good investment in 2021. But you'll need to pick the greatest regions in the UK to make it lucrative.

Stamp Duty on Buy to Let Properties

The government amended the stamp duty laws, resulting in additional surcharges for buy-to-let investors. Since April 2016, when buying additional buy-to-let properties, buy-to-let investors have had to pay an extra 3% in stamp duty. The extra has the potential to increase the stamp duty bill by thousands of pounds.

Investors should make their investments in parts of the UK with the strongest yields and capital gain potential. The true message here is that if your local location does not offer strong yields, you should be willing to look further afield for your buy-to-let investments. Other non-local locations to visit include the Midlands, South Wales, and Scotland.

Rental Property Demand Has Increased

People have been forced to take stock of their homes as a result of the pandemic, and many are considering downsizing to save money or even moving out of cities into the surrounding areas.

There has also been a rise in the number of people working from home, and because of the uncertainty surrounding the pandemic, many people who were considering buying a property are now opting for long-term rentals instead.

Focus on income rather than short-term capital growth.

Landlords who invest in buy-to-let properties should focus on income rather than short-term capital growth. Buy-to-let landlords should focus on income rather than short-term capital gain, according to experts. Subtract your annual mortgage expense from your annual rent to get your annual ROI. Then, as a percentage of the purchase price, calculate the yield. A home that costs £200,000 and generates £10,000 in annual rent, for example, has a 5% gross yield. In several parts of the UK, you may currently get higher rental yields than this.

Profit and Cash Flow Analysis

Make use of the 1% rule. According to this criterion, you should be able to make rental income from a property that is at least 1% of the purchase price on an annual basis. So, if your buy-to-let home costs £200,000, you must be satisfied that it will provide at least £2,000 in rental revenue every year. Any buy-to-let property should make at least £200 per month in profit. Here, you'll want to make your own rule. Perhaps 2%, or even more, is more comfortable for you. Whatever rule you come up with, if the buy-to-let property fails these criteria, go away. This is a quick method of evaluating a buy-to-let home investment.

Find the Best Buy-to-Let Loans

  • Mortgage Broker for Buy to Let Properties

Make a reputable mortgage broker (or many, if possible) a member of your virtual buy-to-let investing team. Mortgage brokers are a smart bet because they can provide you with a wide selection of options and can assist you in determining what is best for your specific circumstances. Discuss all the aspects of your investments, including location, budget and deposits. If you are looking for properties for sale in Claygate, determine the property value, the deposit you can contribute and then discuss the buy-to-let loans available for you.

  • Deposit on a buy-to-let property

In terms of a buy to let mortgage deposit, you can anticipate having to come up with anywhere from 25% to 40% of the investment property's purchase price. A large number of property investors prefer interest-only buy-to-let mortgages. You simply pay the interest on the loan each month with this type of mortgage.When the mortgage is paid off, you will repay the capital. Monthly mortgage payments are usually covered by the rent that landlords get from their tenants. The amount you can borrow with a buy to let mortgage is determined by your deposit, anticipated rental income, and personal circumstances. Any lender will want to see that the rent you earn will cover your mortgage payments in full.

  • Mortgage Rates for Buy-to-Let Properties

Mortgage rates for buy-to-let properties differ from one lender to the next. As a general rule, a buy to let mortgage will have an annual percentage rate (APR) of between 3% and 4%. Lenders will determine rates based on the deposit amount as well as other considerations.You can use an online buy to let mortgage repayment calculator like this one to estimate your mortgage repayments more accurately. If you're looking for one of these useful calculators online, look for a buy to let mortgage calculator in the United Kingdom. The payback period for a buy to let mortgage is typically 25 years. Shorter terms are available, and you may be able to locate a lender who will extend the term beyond 25 years in some situations. Some lenders impose upper age restrictions on borrowers, while others do not.


Investing in buy-to-let properties in the UK is still profitable in 2021. If you follow the golden guidelines, you'll have a decent chance of succeeding. To guarantee that you get the most out of your investment, seek parts of the country that have the best rental yields and development prospects.


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