Buy-to-Let (BTL)

The practice of purchasing a residential property specifically to let to tenants rather than to live in, typically funded with a specialist buy-to-let mortgage.

Buy-to-let (BTL) refers to the purchase of a residential property with the primary intention of letting it to tenants and generating rental income. The term is also used specifically to describe the type of mortgage product available for such purchases.

BTL as an investment strategy became popular in the UK from the mid-1990s when the BTL mortgage market was formalised. The basic model is straightforward: buy a property, borrow 75% of its value, let it to tenants, use the rent to service the mortgage, and benefit from any capital appreciation over time.

The modern BTL landscape is significantly more complex than it was in the 2000s. Section 24 tax changes, the 5% SDLT surcharge, EPC requirements, the abolition of Section 21 no-fault evictions, and rising mortgage rates have all changed the economics. BTL remains viable in areas with high gross yields and for investors with the right structure, but the era of simply buying anything and letting it out profitably is over.

BTL mortgages are specialist products assessed primarily on rental income rather than personal income. They require a minimum 25% deposit, and rental income must typically cover 125-145% of the monthly interest payment at a stressed rate.

Referenced in

Is buy-to-let still worth it in 2026?Gross yield, net yield, and ROI: what the numbers actually mean Buy-to-let mortgages explained