How much deposit do I need?
Buy to let deposits are bigger than residential ones. Most lenders want at least 25% of the purchase price, a handful will stretch to 20%, and the sharpest rates are generally reserved for landlords putting down 40% or more. On top of the deposit you’ll need funds for stamp duty, legal fees and a cash buffer (more on costs below).
Rental calculations: the bit that catches people out
Here’s the thing first time landlords rarely expect: with buy to let, how much you can borrow is driven mainly by the rent, not your salary. Lenders use an Interest Cover Ratio (ICR) test: the rent must cover a set percentage of the mortgage payment, calculated at a “stressed” interest rate higher than the one you’ll actually pay.
Typically, lenders want rent to cover 125% of the stressed payment for basic-rate taxpayers, and 145% for higher-rate taxpayers (because tax takes a bigger bite out of their rental profit).
A worked example: say you want to borrow £150,000 and the lender’s stress rate is 5.5%. The stressed interest-only payment is £150,000 × 5.5% ÷ 12 = about £687 a month. A basic-rate taxpayer needs rent of at least 125% of that, around £860 a month. A higher-rate taxpayer needs 145%, around £997. If the achievable rent falls short, the loan shrinks, and a bigger deposit is needed to bridge the gap.
Different lenders use different stress rates and ratios, which is why the same property can support very different loan sizes depending on where the case is placed. Finding that fit is a big part of what I do.
What to look out for when choosing a property
Not every property that looks like a bargain makes a good first buy to let, and some are genuinely hard to mortgage. Before you offer, think about:
- Leasehold service charges and ground rent: high or fast-rising charges eat your rental profit and can put lenders off. Check the lease length too.
- Flats above shops: many lenders are wary, especially above takeaways and restaurants. Mortgageable, but the lender pool shrinks.
- Non-standard construction: concrete builds, timber frames of certain eras, and some high-rise blocks limit your lender options and future resale.
- Tenant demand: the best yield on paper means nothing if the property sits empty. Talk to local letting agents about what actually rents.
Tenant types, and how lenders feel about them
Who you plan to let to affects which lenders will take the case. Working professionals and families are accepted almost everywhere. Students are fine with many lenders, though some cap the number of unrelated sharers before the property counts as an HMO. Tenants receiving benefits are accepted by a good number of lenders (attitudes have improved a lot) but not all. None of this should dictate your strategy; it just needs matching to the right lender from the start.
EPC rules: today and the direction of travel
Right now, a rental property in England and Wales generally needs an EPC rating of at least E before it can be let. The government has confirmed plans to require rented homes to reach EPC C by 2030. Those plans could still evolve, but the direction of travel is clear, so if you’re choosing between two properties, the one that’s already at C (or can get there cheaply) is carrying a lot less future risk. I’d factor it into any purchase today.
The true costs of being a landlord
Budget honestly before you buy. Alongside the deposit, expect:
- Stamp duty: additional dwellings in England & Northern Ireland carry a 5% SDLT surcharge on top of standard rates.
- Valuation and lender fees, plus legal costs on purchase.
- Letting agent fees if you’re not self-managing, typically a percentage of the rent.
- Landlord insurance: buildings cover at minimum, ideally with rent guarantee options considered.
- Voids and maintenance: empty months and repairs happen to every landlord. Keep a cash buffer.
Rental profit is also taxable, and how much tax you pay depends on your circumstances and how you own the property, so please speak to a qualified tax adviser before you buy.
The Renters’ Rights Act 2025
New landlords are entering the market as the rules change. The Renters’ Rights Act 2025 brings in its main provisions from May 2026, including a move to periodic tenancies and the abolition of Section 21 “no fault” evictions. It’s not a reason to avoid buy to let, but it does reward landlords who choose the right property and tenant profile from day one. It’s something I help every new client plan around.
What I’ll do for you
Run the rental calculations before you offer, sense-check the property and tenant plan, research the whole market for first time landlord deals, and manage the application through to keys-in-hand. Initial chat and research: free. Arrangement fee: £495 on completion.
First time landlord FAQs
Do I need to earn a minimum income?
Many lenders like to see a minimum personal income (often around £25,000) but plenty have no minimum at all, as long as the rent stacks up and you can show you’re not reliant on the rental income to live. It’s a placement question, not a barrier.
Can I live in my buy to let?
No. A buy to let mortgage is granted on the condition that you don’t live there. Moving in without telling the lender is mortgage fraud territory. If you or a family member might live in the property, you need a residential or regulated mortgage instead, and I can arrange that properly.
Do I need to own my own home first?
Not necessarily: some lenders will consider first time buyers going straight into buy to let, though the pool is smaller and the checks are tighter. It’s very doable with the right lender.
Are buy to let mortgages interest-only?
Most landlords choose interest-only to keep monthly costs down and cash flow healthy, but repayment is available if you’d rather chip away at the balance. We’ll pick the structure that fits your plan.