Becoming a landlord: what it actually takes

buy-to-let used to be a straightforward wealth-building strategy: buy a property on a high-LTV interest-only mortgage, let it to tenants, cover costs, pocket the difference, watch capital grow. Section 24 tax changes, higher SDLT, tighter lending, and increased regulation have made it harder, but still viable for the right investor with the right property.

Here's an honest breakdown of what you need to know before buying your first buy-to-let, the financials, the regulations, and the realistic expectations.

Some buy-to-let mortgages are not regulated by the Financial Conduct Authority.

What the numbers actually look like

Deposit required

Minimum 25%, often 30-35% for new landlords or higher-risk property types. On a £200k property, that's £50k,£70k cash before fees.

Stamp Duty surcharge

buy-to-let purchases attract 5% SDLT surcharge on top of standard rates. On a £200k buy-to-let, that's £11,500 SDLT vs £1,500 for a main residence, £10,000 more tax upfront.

Mortgage rates higher

buy-to-let rates typically 1-2% higher than residential. A £150k buy-to-let mortgage at 5.5% costs around £688/month interest-only.

Gross rental yield

Varies by area. 4-6% gross yield is typical for the South East; 8-10% for parts of the North. Gross yield = annual rent ÷ property value. Before costs and tax, net yield is usually 3-4% lower.

Costs you often forget

Agent fees (10-15% of rent for full management), gas safety certs, EICR, insurance, repairs, voids (average 1 month per year empty), service charge if leasehold. Budget 20-25% of rent for running costs before tax.

Section 24 tax impact

Higher-rate taxpayers can only claim a 20% tax credit on mortgage interest, not full deduction. On a £1,200/month mortgage interest (£14,400/year), the tax cost difference is £2,880/year. This is why many landlords now hold BTLs via limited companies.

Regulation and compliance

buy-to-let is heavily regulated. Non-compliance can result in fines up to £30,000 per property or criminal prosecution. The basics:

• Gas safety certificate (CP12). Annual. Must be issued by a Gas Safe engineer. Legal requirement.
• Electrical Installation Condition Report (EICR). Every 5 years. Property must meet the 18th Edition wiring regulations.
• Energy Performance Certificate (EPC). Minimum E rating required (likely moving to C by 2028 for new tenancies).
• Smoke and CO alarms. On every floor, in every room with a solid fuel appliance.
• Right to Rent checks. Verify prospective tenants' right to rent in the UK.
• Deposit protection. Deposits must be held in a government-approved scheme (DPS, MyDeposits, TDS) within 30 days.
• How to Rent guide. Give to all new tenants at start of tenancy.
• Selective licensing. Many councils (including Havering and parts of Redbridge/Newham) require a landlord licence. Fines for unlicensed properties are severe.

Most new landlords use a letting agent, at least for the first property. Full management costs 10-15% of rent but handles all compliance, tenant sourcing, inspections, and repairs. Worth the cost if you're new and want to avoid mistakes.