Buy-to-let: Our Guide to the Basics


Thanks to the growing demand for rental properties, there’s never been a better time to become a buy-to-let landlord. By purchasing a property to rent out, not only can you increase your monthly income, you could also see the value of your investment increase greatly over time.

As with any investment, it’s important that you do plenty of research before placing your money in a buy-to-let property. In this post we’ll give you the buy-to-let basics by breaking down some of the most common property investment jargon.

AST (Assured Shorthold Tenancy) – An assured shorthold tenancy offers the landlord a guaranteed right to repossess their property at the end of the stated term in the tenancy agreement.

Buy-to-let Mortgage – A mortgage arrangement for an investor to purchase a property for let. Often, a buy-to-let mortgage will be an interest only mortgage as investors aim to sell the property to pay off the capital. Interest rates tend to be higher than normal homebuyer mortgages.

Capital Growth – The amount that the property has grown in value in comparison to the purchase price.

Cash Investor – This is an investor who purchase buy-to-let properties by paying in full rather than taking out a buy-to-let mortgage. Cash investors are normally previous or existing landlords with large portfolios or people who have inherited the funds. Cash investors will usually enjoy better yields on property, as they do not pay interest on mortgage repayments.

CGT (Capital Gains Tax) – This is a tax on the capital gains of a property for an investor.

Common Household – Where a residential property is self-contained, shared and let as a whole house by two or more tenants. Another term for this is HMO (House in Multiple Occupation).

Conversion – Dividing a property into a number of self contained dwellings. Often landlords with large properties will consider this to maximise returns.

Credit Search References – References requested for tenants in order to let a property. These references ensure a tenant is financially stable and able to pay rent on time.

HMO (House in Multiple Occupation) – These properties are usually student accommodation or house-shares where the whole property is rented and shared by multiple people. Often this can be more profitable for a landlord but certain regulations and insurance issues will need to be addressed.

Inventory – The inventory details the contents of a property prior to the tenant moving in. At the end of a tenancy, the inventory will be checked against the current property contents. Any discrepancies will be flagged and organised between tenant and landlord or letting agent.

Let Only – This is a property where the landlord manages all aspects of the tenancy from rent collection to maintenance. A letting agent is instructed to find a tenant at the end of contracts for a fee.

Managed Property – A managed property is where an agent handles the day-to-day running. This is perfect for investors who do not want to manage their property themselves. The managing agent will source tenants, collect rents, carry out maintenance and ensure the property abides by regulations.

Periodic Tenancy – A periodic tenancy is where a tenancy contract has run out but the tenant has an agreement to continue living in the property on a month-by-month basis.

Yield – This is the percentage return on your investment. Normally calculated on an annual basis.

Our buy-to-let team are experts in identifying potential investment opportunities for our clients. Whether you’re a first-time investor or a seasoned professional, our team offer a personalised and bespoke service to get the very best return.

For more information visit our buy to let page to fill out our buy to let enquiry form, or call us on 0161 448 4708.


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