Becoming a buy-to-let landlord presents a number of exciting financial possibilities. Our buy-to-let guide covers everything from what to look for in a property, to tax requirements and potential costs, giving you a good idea of what to expect.

What is Buy to Let?

Buy to let is a process that involves buying a property that will be used to let to tenants. The owner of the property serves as the landlord and typically uses the monthly rental income to pay off the mortgage.

What to look for in a buy-to-let property?

As the landlord of the property, you will not be living in the property so you should treat it as a financial investment that you need to secure a good financial return on.

So, when looking around for a buy-to-let property, focus on the things that will be important for tenants. This includes:

• Local amenities – shops, restaurants, parks, doctors etc.
• Travel connections – train/tube stations, bus routes
• Schools – check how they are rated by Ofsted
• Building type – flat, apartment or house, depending on budget
• Property size – number of bedrooms in the property
• Property features – private parking, garden etc.
• Resale value – worth checking if you intend to sell at a later date
• Maintenance – look for any damage to property: mould, leaks etc.
• Fixtures and fittings – ensure everything is up to code, including gas and electricity supplies

How much would it cost to let out my property?

One of the most important things about being a buy-to-let landlord is that you need to ensure you receive a strong return on your investment. Not only because you’ll want the venture to be financially worthwhile to generate a healthy profit, but also because you need to earn enough to pay off your mortgage commitments.

As a landlord, you will have several mandatory financial responsibilities that need to be accounted for. These include costs for:

• Energy Performance Certificates (every 10 years)
• Electrical safety inspections (every 5 years)
• Gas safety certificates (every year)
• Smoke and carbon monoxide alarms (varies depending on size of the property)

Throughout the tenancy, you will also have to pay for any repairs and maintenance required to keep the property and its fixtures and fittings in good, workable condition.

The responsibilities of a Buy-to-Let Landlord

When you become a buy-to-let landlord there are a host of legal responsibilities that you need to meet. This means you’ll have to:

• Carry out annual gas safety checks on all gas appliances
• Ensure smoke and carbon monoxide alarms are maintained in working order
• Provide repair and maintenance for the property where required
• Check that the electrical appliances and wiring is safe for use
• Keep the tenant’s money in a government-backed scheme
• Only enter the property with the tenant’s permission and provide good notice of the request
• Carry out evictions following the correct legal procedure

Tax Responsibilities

Bring a buy-to-let landlord also brings with it some important tax responsibilities you need to be aware of, such as:

• Stamp duty

Assuming this is your second owned property, you will be liable to pay the additional stamp duty rates. For properties worth up to £125,000 you will have to pay 3% stamp duty. Properties worth £125,000 to £250,000 pay 5%, £250,0001 to £925,000 pay 8%, £925,001 to £1.5 million pay 13% and for anything over £1.5 million it is 12% stamp duty.

• Income tax

Any rent you receive must be declared on a Self-Assessment so it can be taxed at the relevant rate. As of 2022-23, the basic rate is 20%, the higher rate is 40% and the additional rate is 45%.

• Capital gains tax

If the property is sold for more than you originally paid (after cost deductions such as stamp duty and estate agent fees) you will have to pay capital gains tax. The tax-free allowance for 2022-23 is £12,300. A couple’s joint allowance is £24,600. Any profit above this amount will be taxed at 18% for basic-rate taxpayers and 28% for higher rate taxpayers.

• Inheritance Tax

You will have to pay inheritance tax although the amount varies depending on your circumstances. As a sole landlord with a property value (less outstanding mortgage commitments) exceeding £325,000 then you are liable for 40% inheritance tax. For married or civil partner landlords, the threshold is £650,000 which is taxed at the same rate.

Choosing Stadium Residential for your Buy-to-Let Property

Whether it’s your first time as a buy-to-let landlord or if it’s a process you’ve been through before, Stadium Residential can make the journey easier to manage.

As buy-to-let experts in North London, we can help you identify the areas that will maximise your investment so you can enjoy a steady income. We’ll guide you through each step and use our local knowledge to match you with the right property to suit your budget. Our services also extend into marketing your property and finding the right tenants for your property, along with a variety of property management solutions tailored to suit your needs.