Buying a first rental property is a different exercise from buying a home to live in. Lenders assess the rent the property can generate, the borrower’s experience and income, and the deposit, and the numbers must work after costs and tax. With Bank Rate at 3.75% after the Bank of England’s September 2026 hold, and a Budget due on 28 October, first-time landlords should plan carefully and keep a margin for change.
How buy to let mortgages are assessed
Most lenders base the maximum loan on rental income rather than salary alone. They apply an interest coverage ratio (ICR), requiring the expected rent to exceed the mortgage interest by a stated percentage, calculated at a stressed rate. Our article on the buy to let interest coverage ratio explains the calculation. A higher deposit generally gives you a lower stress requirement and wider product choice.
Deposit and loan-to-value
Buy to let lenders commonly require a deposit of around 25%, though some products allow more borrowing and the best pricing is typically available at lower loan-to-value. Remember to fund stamp duty (including any higher-rates surcharge on additional properties), legal fees, valuation, arrangement fees and a cash reserve for voids and repairs.
First-time landlord criteria
Some lenders limit or decline applications from borrowers who have never owned a property, while others accept first-time landlords who own their own home. If you are a first-time buyer purchasing a rental without owning your home, the choice narrows further and often needs specialist lender selection. A broker can place the case with the right lender first time, which avoids multiple credit searches.
Personal name or limited company?
Holding property in your own name or in a limited company has different tax and lending consequences. Companies can deduct finance costs in calculating profits, while individuals receive a basic-rate tax reduction instead, and company mortgage products and rates can differ. The right route depends on your income, plans and exit. We discuss the lending side in limited company buy to let mortgages and the tax background in Section 24 and limited company buy to let. Please take advice from a qualified tax adviser or accountant before deciding, as tax treatment depends on your circumstances.
Choosing the property and the rent
Choose on yield, demand and condition rather than price alone. Check the achievable rent with local agents, consider tenant demand, and review the property’s energy rating. Rental properties face tightening energy-efficiency expectations, so see our guide to EPC C and retrofit finance for landlords. Leasehold flats need a close look at lease length and service charges.
The legal landscape for landlords
The Renters’ Rights Act reforms have changed how tenancies operate, and lenders have updated policies accordingly; read how in the Renters’ Rights Act and buy to let lending. Landlords must also meet gas, electrical, deposit and licensing obligations, and keep records.
Fixed or tracker, and the term
A fixed rate gives payment certainty over two or five years, which suits cash-flow planning for a first investment. A tracker follows Bank Rate and can benefit if rates fall but exposes you if they rise. Check early repayment charges and whether a product is portable or allows overpayments.
Stress-test your plan
Model the rent falling, a void month or two, a rate rise at remortgage and repair costs. If the investment only works at today’s rent and rate, it carries more risk than it appears. Treat the Budget as a prompt to check your assumptions rather than to rush a decision.
Where we come in
We arrange buy to let finance across the market for first-time and experienced landlords. See our buy to let mortgage service, the buy to let and portfolio landlord hub, areas we cover, or contact us to discuss your plans.
Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Most buy to let mortgages are not regulated by the Financial Conduct Authority. The tax treatment depends on individual circumstances and may change.
Giles Finance is a trading style of Giles Finance & Consultancy Services, authorised and regulated by the Financial Conduct Authority (FRN 726857).