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As inflation continues to rise in the UK, there aren’t many appealing saving options left. People are now looking for assets to put their money in and get a return on their investment. Many people are now looking into buy-to-let properties.
These properties offer income and a great potential for capital growth. Around 42,980 homes were purchased this year for buy-to-let purposes. If you have been considering investing in such a property, we’ll guide you and help you decide.
To consult a property tax advisor in London, visit IBISS & CO.
Buy to Let Guide
Investing in a Property
When you choose to invest in a property, you’re buying it to get a financial return. In the UK, many people rent their properties to tenants and earn monthly rent. This rental income is their return on investment.
Many people also buy cheap properties, upgrade and renovate the, and then sell them off for a good profit. This is called property flipping. Investing in property is reliable and helps you earn passive income. There will always be a demand for house or apartment rentals.
However, it’s important to note that certain costs are also involved. You would have to pay insurance costs and extra tax. This tax would be your property tax as well as rental income tax. You would also have to pay for the property’s maintenance.
Buy To Let Properties
While many people continue to invest in buy-to-let properties, the government has made this investment less attractive than before. You must apply for a mortgage when purchasing the property, which costs more than a residential mortgage.
A lot of effort goes into being the landlord of a buy-to-let property. You would have to deal with the occasional annoying tenants, flooded bathrooms, and other significant risks. There will always be unseen costs in managing such a property, and it’s not a short-term investment either.
Tax Rules
There are different and new-ish tax rules regarding buy-to-let properties in the UK. If you are buying a buy-to-let property and already own another residential property, you will usually pay the higher SDLT rates for additional properties. These are generally 5% above the standard SDLT rates. Before April 2020, landlords could deduce their mortgage payments from rental income. This would allow them to get some tax relief.
Now, buy-to-let owners have to pay income tax on their rental income. How much of their income goes into mortgage interest payments doesn’t matter. They can get a 20% tax credit on this interest, but if a landlord is already paying 40-45% income tax, this won’t be a huge relief.
For a full breakdown of SDLT, Section 24, allowable expenses and CGT, read our buy to let tax guide.
First-Time Buyers
If you’re a first-time buy-to-let buyer, you might not qualify easily for a mortgage. You would need a bigger deposit for a good deal. This is because the lender will consider your reasons and circumstances for purchasing a buy-to-let property without owning a proper home.
If you’re looking for business or tax advice regarding buy-to-let properties in London, visit us at IBISS & CO. today. Our chartered tax advisers and accountants can help you with property tax advice.
Muhammad Sufyan Moavia
Muhammad Sufyan Moavia is a Chartered Tax Adviser (CTA) and FCCA who advises buy-to-let landlords on Section 24 mortgage interest restrictions and Section 162 incorporation relief. He helps property owners structure their holdings to use every available relief and exemption. Blog Last Update in 2026.
