‘Buy to let’ – what does it mean and is it right for you?

People purchase properties for many reasons, not just to set up home with their family. This article explores the meaning of ‘buy to let’, the reasons people choose this option, the advantages and disadvantages and the practicalities.

A ‘buy to let’ scenario is when somebody purchases a property – usually either a house or a flat – with the main intention of letting (or ‘renting’) it out to somebody else to live in. The purchaser will remain the owner of the property whilst the person the property is let to will live there from day to day.

It will be the purchaser’s intention that the rent that letting out the property brings in will be enough to cover the cost of the mortgage and other bills and will, ideally, even leave a sum left over (over and above the bills and mortgage) to boost the purchaser’s income. Indeed, some multiple property owners are able to make a living entirely buy purchasing and renting out properties. However, buying to let is certainly not a way to make money quickly – it is very much a long term plan.

The advantage of buying to let to the property owner – at times when house prices are rising - is that while the property is being rented out it may be increasing in value and could become a sound investment for the future. The fact that it seems to be increasingly difficult for first time buyers to save a deposit to buy their own property means that the demand for properties to let remains constant.

Mortgage lenders offer specially designed mortgages specifically for people who are buying properties to let. It is important that you research these mortgage options carefully to understand what will be required of you and whether you will qualify for such a mortgage.

There are, however, some disadvantages to buying to let which you must take into consideration when weighing up this option. These include – but are not limited to – the cost of purchasing a property (i.e. stamp duty, solicitors fees), tenants who are unreliable or difficult to deal with, and periods where you do not have any tenants to rent the property out to which leaves you with the mortgage and bills to pay yourself.

In summary, it is clear that buying to let is an option available to those in a position to consider it but, as with all financial scenarios, the pros and cons must be weighed up and you should ensure you go into the process with great understanding of any risks or pitfalls.

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