First-time homeowners continue to enter the real estate market

For new landlords starting a career in the UK buy-to-let industry, there are a few things you will need to do before taking on tenants. We get a sneak peek from Adele MacGregor at Compare My Move.

A rental property can be a good investment and a way to earn monthly income. However, it is essential that you know what you are undertaking. This includes the initial costs of buying a property, the ongoing costs of maintaining it, and your tenants’ rights.

Buy a property

Landlords buying a rental property for the first time will not only need the deposit, but will also need to be prepared to pay for the survey and transfer fee.

The cost of transferring ownership when buying a property in 2022 is £2,239 on average. The investigation fee will depend on the investigation and the type of property. Older or unusual properties would benefit from a Tier 3 survey, which is more expensive.

You’ll also need a specialist mortgage, and some lenders offer specific products for new homeowners. With this type of loan, you often only pay interest each month. You will have to repay the property in full at the end of the term. Lenders have stricter criteria for these mortgages as they carry higher financial risks.

To be eligible, you must:

  • Have a regular income of over £25,000
  • Be 45 or younger
  • Have owned their own home for six months (with or without a mortgage)
  • Buying property in the UK
  • Have a good credit score
  • Intention to invest in the property as owner

Lenders require a higher deposit for buy-to-let. It will probably be between 20% and 40% of the price of the property.

Taxes new homeowners need to know

When you acquire a rental property, you will be subject to certain taxes. These include:

Income tax

As a professional owner, you will derive income from your new property. As a result, you will have to pay income tax. The base rate is set at 20%, the higher rate at 40%.

Capital gains tax

Base rate taxpayers will be charged 18% on any increase in the value of the property at the time of sale. The rate for higher rate payers is 28%. The tax-free capital gains allowance is currently £12,300.

Stamp duty

As rental properties are classed as second homes, they will be subject to a higher rate of stamp duty. This is an additional 3% in England and Northern Ireland, with a rate of 4% in Wales and Scotland.


It’s likely that your mortgage lender will require you to have building insurance in place, so this is something all new homeowners should factor into their costs. Homeowners’ buy-to-let insurance may include buildings insurance in addition to covering:

  • Contents
  • Responsibility
  • Alternative accommodation costs
  • Protection of rental income

Find tenants

While it’s possible to rent out your property without a letting agent, keep in mind that they will have expert knowledge and tools at their disposal, which can be especially helpful for first-time landlords. They can also give you an idea of ​​market rent prices, deposits and drafting contracts.

You will want to ensure that the appropriate checks have been carried out. This includes financial checks and references for potential tenants. After all, it’s your investment and you want to be sure that it will be supported by those who live there. Likewise, you’ll want to make sure you’re a fair and caring landlord.

your responsibilities

The property must be safe and habitable at a minimum. This includes bringing together all of your security responsibilities as lessor, ensure:

  • Gas equipment is installed and maintained safely (including an annual gas safety check)
  • All devices are safe
  • Electrical systems are safe
  • A smoke detector is installed on each floor
  • A carbon monoxide alarm is installed in all rooms where there is a solid fuel appliance
  • Access to emergency exits at all times
  • All furniture and furnishings are fire resistant
  • Fire extinguishers are available

You are also responsible for repairs to:

  • The structure and exterior of the property
  • Heating and hot water
  • Gas appliances
  • Pipes, ducts and ventilation
  • Electrical wiring
  • Basins, sinks and bathtubs
  • Damage caused by repair attempts

Dealing with disputes

Whether it’s rent, damages or deposits, landlords are likely to face disputes over the course of their careers. New owners should therefore be prepared. Many of these issues can be resolved out of court, but if things get out of hand you may want to seek legal advice.

As the owner, you must ensure that you have met all the requirements expected of you. Knowing the rights of tenants will also be very useful to you. Again, working with a rental agent can be beneficial in the event of a dispute.

Penny D. Jackson