Deposits, stress tests, Section 24, company versus personal, and whether buy-to-let still stacks at current rates.
Typically 25% as a minimum, with the best rates at 35–40%. On top of the deposit you need the stamp duty surcharge on additional properties, solicitor fees, survey, lender arrangement fee, and a refurbishment and void buffer. On a £150,000 purchase the realistic all-in cash requirement is closer to £50,000 than the £37,500 the deposit alone suggests.
Buy-to-let affordability is assessed on rental cover, not your salary. Lenders apply an interest coverage ratio, commonly 125% for basic-rate taxpayers and 145% for higher-rate, against a stressed interest rate that is usually well above the pay rate. That combination is why a property can rent for more than the mortgage payment and still fail the test. Five-year fixed products are often stressed at the pay rate, which is why they let people borrow more.
Section 24 of the Finance (No. 2) Act 2015 removed the ability of individual landlords to deduct mortgage interest as a business expense. It was phased in from 2017 and fully applies now: you declare the full rent as income and receive a 20% tax credit on finance costs instead. For a higher-rate taxpayer this can mean paying tax on money that went straight to the lender, and in leveraged cases producing a tax bill larger than the actual profit. It does not apply to companies, which is the main reason new purchases are mostly incorporated.
For a higher-rate taxpayer buying with a mortgage and intending to hold long term, usually yes, full interest deduction, corporation tax rather than income tax on retained profit, and easier succession planning. Against that: company buy-to-let mortgage rates are higher, there is an accountancy cost every year, and getting money out as dividends is taxed again. For a basic-rate taxpayer buying one property with a large deposit, personal ownership is often still simpler and cheaper. Model both with an accountant on your actual numbers before you offer.
In much of the south east on a 75% mortgage, single-let buy-to-let does not produce meaningful cashflow at current rates, it is a capital growth bet with a small yield. In parts of the north, the midlands, Wales and Scotland where yields run 7–9%, it still cashflows. The strategies that reliably work in a high-rate environment are the ones that raise the income per property (HMO, serviced accommodation, multi-unit blocks) or add value at purchase (BRRR, conversions) rather than buying at market price and waiting.
In England and Northern Ireland, additional residential properties attract a surcharge on top of standard SDLT rates, and companies pay it from the first property. Scotland charges the equivalent Additional Dwelling Supplement under LBTT and Wales charges higher residential rates under LTT. Rates and thresholds have moved repeatedly in recent years, so check the current HMRC calculator for the completion date rather than relying on a figure from a course.
The current minimum for letting in England and Wales is EPC E, with limited exemptions that must be registered. Government policy on raising the minimum to C for rented property has been repeatedly announced, withdrawn and revisited, so treat any specific future date with caution, but treat the direction of travel as certain. Buying an F or G rated property without costing the works to get it lettable is a recognised way to lose money.
Work the full cost stack, not the mortgage and rent. That means: rent, minus mortgage at a stressed rate, minus management, minus maintenance at a realistic percentage, minus insurance, minus voids at a realistic percentage, minus licensing, minus service charge and ground rent if leasehold, minus the tax. Then ask what the number looks like if rates rise two points and the property sits empty for two months. Our free deal analyser spreadsheet does exactly this and takes about ten minutes per property.
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The questions almost everybody asks in their first month, how much money you need, whether it is too late, and what to do first.
8 questions →Serviced accommodation & short letsThe most-asked questions about running serviced accommodation in the UK, planning, licensing, mortgages, insurance, and whether it still works.
9 questions →Rent-to-rentWhether it is legal, what consent you need, what a proper agreement looks like, and how people lose money doing it badly.
8 questions →HMOs and multi-letsLicensing, Article 4, room sizes, fire safety and the numbers, what actually determines whether an HMO works.
8 questions →Deal sourcing & complianceWhat you legally must have in place before you take a penny for a deal, and what sourcing actually pays.
7 questions →Money, finance & raising capitalBridging, joint ventures, private investment, and the rules that decide whether asking someone for money is lawful.
6 questions →Law, tax & complianceThe Renters' Rights Act, deposits, right to rent, licensing penalties, and the obligations people find out about too late.
7 questions →Training, mentoring & choosing a courseHow to judge a property course, what mentoring is genuinely worth, and the questions worth asking before you spend anything.
6 questions →