These mortgage types cater to property investors and private landlords, who won’t reside in the purchased property.

Purchasing additional property for rental purposes carries risks; there’s no assurance of rising house prices or steady rental income.

However, renting out a second property might yield substantial financial gains over time. It’s crucial to weigh the risks and rewards of ‘Buy to Let’ before proceeding.

In buying a rental property, your investment goal—whether it’s regular income or capital appreciation—should guide your decisions. This choice influences the property type, location, and inherent risks, given the uncertainty of property price increases.

A Buy to Let mortgage is necessary if outright purchase isn’t feasible. This mortgage type differs significantly from others.

Lenders typically base mortgage offers on the property’s rental potential and possibly your income, though your income might not always be considered.

Expect to provide a 20-30% deposit, higher than other mortgages. Buy to Let mortgages usually carry higher interest rates. Note that from 1 April 2016, buying a second property incurs an extra 3% Stamp Duty.

Prospective landlords should also consider the ownership costs of a rental property, including:

• Property Maintenance: Costs for repairs and redecoration before re-letting.
• Letting Agent Fees: Around 10% of monthly rent for tenant management, potentially higher for full management.
• Ground Rent/Service Charges: Applicable to leasehold properties.
• Legal Insurance: Coverage for eviction-related costs due to non-payment, damage, or anti-social behaviour.
• Buildings/Contents Insurance: Necessary for the building and any provided furnishings.
• Furnishings: Initial costs for furnishing a rental property.
• Appliance Safety and Inspection: Regular safety checks for certain appliances, like gas boilers and fires.

Choosing a letting agent affiliated with The Association of Residential Letting Agents (ARLA) is advisable, ensuring rental income and tenant deposits protection.

For more information, visit www.arla.co.uk. Note: This website is not regulated by the FCA. We are not responsible for its content nor endorse it for information about becoming a private landlord.