Buy to let mortgages

We have dedicated mortgage department that is ready to help you find the right mortgage

Buying a property to let as a commercial enterprise has been around for a long time but it is only relatively recently that it has become within the reach of ordinary people.

In the past mortgage lenders charged commercial rates of interest and imposed additional surcharges on mortgages for buy-to-let properties and so this excluded most people on an average income. However, this situation has now changed thanks to the Association of Residential Letting Agents (ARLA) who initiated the introduction of a new type of mortgage which not only takes into consideration the current occupational earnings of an individual but also the earning potential (rental income) of the property to be let. This means that many more people can now afford to take out an additional mortgage on an investment property.

Buying to let can be an excellent investment if you do your homework and choose your property carefully. Just like any other commercial business you should learn as much as you can about the letting business and check out the local property markets and competition before taking the plunge. If you buy an unsuitable property in an unsuitable location you may be disappointed by the financial return. But buying a property to let is usually considered to be a good and reliable form of long-term investment from which you stand to benefit both in terms of the rental income potential and possible increase (capital growth) in the market value of the property.

Finding the right property
Before you start your search for a buy-to-let property, get to know as much as you can about the property market and the rental opportunities in the area you are considering. Ideally you should be looking for a property which satisfies the needs of your potential tenants and is in an area of high demand.

The success (or not) of your investment depends crucially on finding the right type of property in the right location.

Most tenants will be looking for properties which are close to good schools or nurseries, have good transport links (bus, train, motorways) and within easy reach of good local amenities (shops, doctors, dentists, entertainment etc.). They will also be more attracted by a well maintained and well presented property. And if you really want to beat the competition try finding a property which has plenty of natural light and is in a good, south-facing position and which also has a garden (or balcony, if it is a flat or apartment) and somewhere to park a car.

Long or Short Lets?
When you first let a property you need to decide on what terms and for how long you want to let the property. If you are not living in the property, a property is usually let as a full assured tenancy or as an assured shorthold tenancy.

A long or full assured tenancy typically allows the tenant to stay as long as he/she wants whereas a short or assured shorthold tenancy allows you to get the property back at the end of the agreed term (or within six months if there has been a breach of the tenancy agreement by the tenant).

If you are new to letting, you may prefer to start with a shorthold tenancy because you can, if necessary, repossess your home after the agreed period. And, you will also find that for this reason, most lenders prefer a shorthold tenancy. You can always extend an assured shorthold tenancy for another agreed fixed period at the end of the initial term or you can decide to allow the tenancy to continue as a periodic tenancy for as long as you want.

Even though a full assured tenancy gives the tenant more security there are circumstances in which you will be able to get your property back because the law is there to protect you from a bad tenant. A court can order repossession on a number of mandatory and discretionary grounds.

Information about assured and assured shorthold tenancies is available from the Office of the Deputy Prime Minister or you can go along to your local Citizens Advice Bureau for help and advice. Or take a moment to complete our Enquiry Form and we will arrange for someone to contact you.

Landlord Responsibilities
As a landlord you are required by law to maintain your property and its contents to ensure the safety of the tenants, neighbours and general public.

When you let your property as an assured shorthold tenancy there are 3 chief areas of legal responsibility specified in the Landlord and Tenant Act 1985.

These cover:

Maintenance and repairs - under the Act, you are obliged to maintain the structure and exterior of your property, maintain all water supplies and sanitary and drainage installations and ensure that all sinks, baths, showers, toilets etc. are fit to use. You must also provide and maintain adequate lighting, heating and ventilation and treat any incidences of damp.

Safety of any gas and electrical appliances - The Gas Safety (Installation and Use) Regulations 1994 stipulate that you must maintain all gas appliances and arrange and pay for an annual service/safety check by a CORGI (Council for Registered Gas Installers) approved engineer. You must give the tenant(s) a copy of the safety certificate.

Fire safety of the furnishings and building - You must also ensure that any electrical appliances you supply are safe to use. And, all new and second-hand furniture, furnishings and fittings must comply with the fire resistance regulations specified in the Furniture and Furnishings (Fire) (Safety) Regulations 1988.

Most of these legal responsibilities have to be dealt with before you can let your property. If you do not have the time to ensure you meet all of these demands you should consider using a property management company to do it for you. If you fail to comply with these regulations when you are letting the property as a source of income and you are found to be negligent you could end up in court.

If you are thinking about or already rent out properties and are looking for a low cost buy to let mortgage, or, if you want to speak to an independent adviser please complete are enquiry form and we’ll get a fully qualified independent adviser to call you back.

Great British Finance Limited are authorised and regulated by the Financial Services Authority (FSA). The FSA does not regulate some forms of Mortgage, Inheritance Tax Planning, Credit Cards, Personal Loans, Deposit Accounts & Insurance. If you are submitting an online request, we would advise to read our KeyFacts statement, links are at the top and bottom of this page.

Buy to let mortgages and advice

Buy to let mortgages