Buy to Let Mortgage

What are the implications of recent tax changes on Buy to Let mortgages?

Over the last few years, the biggest change has been in how landlords offset the cost of mortgage interest against their profits – that’s steadily been phased out. It has become more challenging on the net profit side, which is why potential landlords are very concerned about the yield of a property, whereas a few years ago that wasn’t the biggest question.

The focus now is that property’s yield. Can you take a property from low yielding to high yielding? You may be able to own it in a different way, perhaps via a limited company rather than personally. Margins on property have become much more tricky and you have to think outside the box a bit more than a few years ago. [Information correct at the time of recording in September 2025].

Are there any restrictions on using a Buy to Let mortgage for properties in certain areas or for specific tenant types?

There are a lot of things to consider for this, and people are looking at different ways to invest with different types of tenancy agreements.

Since COVID, we’ve seen a lot more people looking at holiday let properties, for example, or serviced accommodation. People have been developing properties that have restrictive covenants in place – where they can only be used for holiday let purposes, and at that point you need a specific lender that will allow those restrictive covenants.

We also need to assess the income in the right way. If you’ve got a holiday let in Cornwall, for example, that property may not let well on an assured shorthold tenancy agreement. So, if you use a lender that does holiday let mortgages, but they base the rental assessment on the AST value, it may fall short.

But lenders that look at the holiday let income will be looking at the high, medium and low season expectations and multiply that by 36 weeks, for example. That tends to allow you to get the borrowing you need – whereas the normal AST route wouldn’t have worked.

You also get HMOs, which are Houses in Multiple Occupancy. A normal Buy to Let mortgage might not quite stack up, but because you’ve got multiple tenancy agreements within that rental property, there’s more profit. You will need specific lenders that accept locked bedrooms, extra kitchens or legal restrictions. You might need to have an HMO licence.

It’s an ever-changing market and people are thinking outside the box – which is great to see. You just need to consider the implications to your mortgage. You don’t want to increase your yield if it’s going to have a massive impact on your ability to borrow – or even restrict you from being able to borrow at all.

Are there any government schemes or support available specifically for Buy to Let investors?

No, there are no mainstream schemes like this, although landlords may be able to access help to get properties to a better EPC rating. There are small grants out there for improving efficiencies, but generally, they’re levied less on the landlord and more on the private owner.

The main implications of government attention are on the tax side. That does have an impact at the moment, so it’s important to know how best to structure your portfolio of properties if necessary.

How can a mortgage broker help with Buy to Let mortgages?

Generally you need to view Buy to Let and property investment as a business.

You’re not just buying an asset. You need to be able to assess the market and your expectations – and have a contingency plan in case it doesn’t quite go the way you wanted.

You need a route out if the market changes. If there’s a housing market crash or property values drop, do you have the ability to sustain that, so you’re not forced into negative equity?

If there are new changes in legislation for tenants, do you have a means to manage that? Are you going to do that yourself or get an expert to support you? We, Windsor Hill Mortgages, will look at everything holistically with our clients and help them create a recipe for success.

Consider the tax side – that’s absolutely essential. You also need solicitors or a conveyancer to get you through this process without too many risks. You need your financial advisor and your mortgage advisor to look at the most tax-effective way to extract the money out of your business – or reinvest it.

That recipe and strategy gives you multiple experts to consider various different views and give you the best chance of managing any changes that might arise in the future.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.

NOT ALL BUY TO LET MORTGAGES ARE REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME