Buy To Let

There are now numerous lenders who are keen to lend money to enable people to purchase a property who intend to let it to tenants. These lenders view such a purchase as a 'separate business transaction', and treat it as a stand alone situation as long as the clients domestic mortgage situation is stable. There are some generic rules. For example, if the purchasers have been employed or self-employed for more than 1 year, have conducted their own mortgage correctly and are proposing to achieve rental income in excess of the cost of finance (monthly mortgage payment). Usually the lenders will allow an additional "Buy to Let" mortgage to the borrower's existing mortgage on their own property.

Lenders have differing rules on the amount the rental income must exceed the mortgage payments by, and some do not insist on this at all. Lenders can also differ on the type of tenants that are allowed (eg. Students). Some lenders are prepared to allow a portfolio of investment properties to be either mortgaged or re-mortgaged.

The Buy to Let market has been progressively growing over the last 10 years. Most landlords find the combination of potential capital appreciation and income generation attractive. Disadvantages can be maintenance costs and any periods when a property is empty.

Other considerations are capital gains tax and income tax but these areas are best discussed with an Accountant.

Please note that buy to let mortgages are not regulated mortgage contracts as far as the Financial Services Authority are concerned in the vast majority of cases.