Let-to-buy: Your ticket to enjoying the best of both worlds

Posted on July 29, 2022

There are many ways that you can secure your space in the UK property market. Whilst purchasing a residential property to create a home of your own or becoming a buy-to-let landlord to capitalise on the booming rental market are the most popular routes to market, these avenues aren’t your only options.

Let-to-buy is fast becoming a great way to move up the property ladder for current homeowners looking to buy another property without selling their current home. But does let-to-buy work and is it the right step for you?

How let-to-buy works

Not to be confused with buy-to-let, let-to-buy offers the opportunity for current homeowners to expand their property portfolios. It involves you renting out your current home and using the equity released to buy a new property which you’ll live in. Once let, the rental income generated from your previous home can then be used to cover the cost of its monthly mortgage repayments.

Why let-to-buy

There are many reasons why homeowners choose to let-to-buy. With let-to-buy, you can move house quickly without selling your current home, meaning you save time and protect your investment for future sale. Let-to-buy is also popular when the market is experiencing difficulties and homes struggle to sell.

Couples looking to buy a property together but wishing to keep their existing properties may want to choose let-to-buy. In addition to this, let-to-buy is great for homeowners wanting to move home in the short term and move back to their property at a later date.

The drawbacks of let-to-buy

The process of letting-to-buy can be complicated. The prospect of having two mortgages, two properties to manage and becoming a buy-to-let landlord is also worrying for many people. Let-to-buy mortgage rates tend to be higher than standard residential mortgages, whilst your new purchase will be subject to a buy-to-let stamp duty surcharge making the process more expensive.

Getting started with let-to-buy

Pursuing a let-to-buy arrangement isn’t just a matter of putting your home on the rental market and waiting for the right tenant.

As most standard residential mortgages don’t permit you to rent out your home, the mortgage on your existing property should be converted to a buy-to-let product. To achieve this, your finances may need to be reassessed.

Whether switching with your current lender or obtaining a deal from a new provider, lenders will need confirmation that your property can bring in a higher rent than your mortgage repayments. You’ll also need to prove that you are purchasing a new home at the same time.

Whether you’re letting to buy or in search of a new home after accepting an offer on your property, we can help. Browse our properties for sale right here.