Let to Buy Mortgage: How It Works, Lenders, Stamp Duty and Tax

By Jake Stott, Knox Mortgages. Reviewed by an adviser authorised under Fort Advice Bureau, FCA FRN 972730. Published 25 September 2026. Last reviewed 25 September 2026.

A let to buy mortgage is the arrangement you use when you want to keep your current home, rent it out, and buy a new home to live in. It is two mortgages in one transaction: a buy-to-let remortgage on the home you are leaving, usually releasing equity for your next deposit, and a residential mortgage on the home you are moving into. Both must be approved and complete together.

This guide goes further than the forum threads that currently fill page one. It shows how lenders test affordability on both properties, names the lenders that do let to buy with their published criteria, works through a full example with the arithmetic shown, and covers the parts that catch people out: the 5% stamp duty surcharge, tax on your former home, and the landlord duties that came in with the Renters’ Rights Act on 1 May 2026. If you are simply moving and selling, our home mover mortgage guide is the better starting point.

How does a let to buy mortgage work?

Let to buy works by splitting one move into two linked mortgage applications that complete on the same day. On your current home, you switch from a residential mortgage to a buy-to-let mortgage. Because buy-to-let lenders will usually lend up to 75% or 80% of the property value, and many owners have paid their balance down below that, the remortgage often releases cash. That released equity becomes all or part of the deposit on your new home.

On the new home, you take a normal residential mortgage. The residential lender sees that you will own two properties on completion and assesses your income with the buy-to-let in the background. Some lenders treat the new purchase as a second property product, which can change the rates available.

The two sides depend on each other. The buy-to-let remortgage funds the deposit, and the residential purchase is the reason the buy-to-let exists. Lenders such as The Mortgage Works ask for a copy of the onward residential mortgage offer before they complete, and some require the same solicitor to act on both transactions. That is why let to buy is a coordination job as much as a mortgage job.

Why keep your house and rent it out instead of selling?

Most people choose let to buy for one of four reasons, and it is worth being honest about which one applies to you. The first is building an asset: you keep a property that is likely to grow in value while a tenant pays down the mortgage. The second is market timing: you want to move now, but selling in a slow market would mean accepting a price you think is too low. The third is flexibility: you are relocating for work and may want to move back. The fourth is sentiment, which is valid but is not a financial reason on its own.

The trade-off is that you stop being a homeowner with one mortgage and become a landlord with two. You take on buy-to-let rates, which are normally higher than residential rates, a higher stamp duty bill on the new home, income tax on the rent with restricted mortgage interest relief, capital gains tax exposure when you eventually sell the old home, and legal duties as a landlord. If the numbers only work on the assumption that nothing goes wrong, they do not work. We will show you the numbers below so you can judge for yourself.

Consent to let vs let to buy: which one do you need?

Consent to let is permission from your current lender to rent out your home on your existing residential mortgage, usually for a fixed period. Let to buy replaces that residential mortgage with a proper buy-to-let mortgage. Consent to let suits a temporary move where you expect to return or sell within a year or two. Let to buy suits a permanent decision to become a landlord, and it is the only one of the two that can release equity for your next deposit.

Consent to let is not guaranteed. Lenders decide case by case, and most will not grant it in the first months of a new mortgage. Where it is granted, some lenders charge an admin fee and some add a loading to your interest rate for the let period. Nationwide has been reported to add 0.5% to the rate on its permission to let; other lenders leave the rate unchanged. Renting out a residential mortgage without consent is a breach of your mortgage terms, and your insurance may also be invalid.

Factor	Consent to let	Let to buy
What changes	Existing residential mortgage stays; lender gives written permission	Existing mortgage repaid and replaced with a buy-to-let mortgage
Best for	Temporary moves, relocation, a slow sale, planning to return	A permanent decision to keep the property as an investment
Typical duration	Often granted for 6 to 12 months, sometimes renewable	Full mortgage term
Can it release equity for a deposit?	No	Yes, subject to LTV and rental cover
Typical fee	Nil to a few hundred pounds admin fee, varies by lender	Product fee (often nil to around £2,000 or a percentage of the loan), valuation, legal fees
Typical rate impact	Some lenders add a loading, reported at around 0.5% to 1% above your current rate; some add nothing	You move onto buy-to-let pricing, normally above residential rates
Early repayment charges	None, because the mortgage stays in place	May apply if your current deal is still in its fixed or discounted period
Rental cover test	Rarely applied formally	Always applied (usually 125% to 145% of a stressed interest payment)
Risk	Lender can refuse or decline to renew	More cost up front, but no dependency on renewed permission

A useful rule of thumb: if you need equity out of your current home to buy the next one, consent to let cannot do the job and let to buy is the route. If you do not need the equity and the let is temporary, ask your lender for consent to let first because it is cheaper and faster.

How do lenders assess affordability on a let to buy?

Lenders run two separate affordability tests, one for each property, and you need to pass both. On the home you are letting, the buy-to-let lender runs a rental cover test, called the interest coverage ratio or ICR. The expected rent must cover a stressed mortgage payment by a set margin. On the home you are buying, the residential lender runs a normal income test, usually a loan-to-income cap of around 4.5 times income plus an affordability model, and then decides how to treat the buy-to-let you will own alongside it.

Test one: rental cover on the property you are letting

The buy-to-let lender takes the loan, applies a stress interest rate, and checks the rent covers that interest by 125% for basic rate taxpayers or 145% for higher and additional rate taxpayers. Skipton, for example, publishes let to buy stress rates at the higher of the product rate plus 2% or 5.5% for fixes under five years, and the higher of the product rate plus 1% or 5.5% for fixes of five years or more. The rent figure is set by the lender’s valuer, not by you or your letting agent, so a valuer who pitches the rent lower than you expected can cut the loan.

Test two: income affordability on the home you are buying

The residential lender assesses your salary or self-employed income in the usual way. The key question is what it does with the buy-to-let payment. Lenders split into two camps. Some treat a buy-to-let that is self-financing as neutral: NatWest’s published criteria say that where the rent covers the mortgage payment, it will exclude the mortgage commitment from affordability, and only a shortfall is counted. Others deduct the full buy-to-let payment as a monthly commitment, which can reduce what you can borrow by tens of thousands of pounds. Choosing the right residential lender is often the difference between the case working and not working.

Worked example: a let to buy with both calculations shown

This is an illustrative case using round numbers so the arithmetic is easy to follow. Rates, rents and criteria are examples only and are not a quote.

The situation. A couple own a house worth £300,000 with £140,000 left on the mortgage. They want to keep it, rent it at £1,350 a month, and buy a £400,000 home in England. Their combined income is £85,000 and neither is a higher rate taxpayer.

Step 1: the buy-to-let remortgage. They remortgage the current home to 75% loan-to-value on a two year fixed buy-to-let product at an illustrative 4.5% interest only.

Buy-to-let calculation	Figure
Property value	£300,000
New buy-to-let loan at 75% LTV	£225,000
Existing mortgage repaid	£140,000
Equity released (before fees)	£85,000
Stressed interest at 5.5%: £225,000 × 5.5% ÷ 12	£1,031.25 a month
Rent needed at 125% ICR: £1,031.25 × 1.25	£1,289.06 a month
Expected rent	£1,350 a month: passes
Rent needed at 145% ICR (if either were a higher rate taxpayer)	£1,495.31 a month: would fail
Maximum loan at 145% ICR: £1,350 ÷ (1.45 × 5.5% ÷ 12)	£203,135
Actual monthly payment at 4.5% interest only	£843.75

Notice the higher rate line. If one of them earned enough to pay 40% tax, the same rent would support around £22,000 less borrowing, and the deposit for the new home would shrink by the same amount. This is the single most common reason let to buy numbers fall short.

Step 2: stamp duty on the new home. Because they will own two homes on completion, the 5% higher rates apply to the whole £400,000 purchase.

Stamp duty (England, rates from 1 April 2025)	Standard rates	With 5% surcharge
£0 to £125,000	£0	£6,250
£125,001 to £250,000 (2%, or 7%)	£2,500	£8,750
£250,001 to £400,000 (5%, or 10%)	£7,500	£15,000
Total	£10,000	£30,000

Step 3: the residential mortgage. From the £85,000 released, they pay £30,000 stamp duty and allow £5,000 for fees, legal costs and moving. That leaves a £50,000 deposit, so they need a £350,000 residential mortgage at 87.5% loan-to-value.

• A lender that ignores a self-financing buy-to-let: £85,000 × 4.5 = £382,500 maximum. The £350,000 fits.
• A lender that deducts the full buy-to-let payment: a simplified illustration is to take the annual payment, £843.75 × 12 = £10,125, off income before the multiple. (£85,000 minus £10,125) × 4.5 = £336,938. The £350,000 does not fit.

Same couple, same properties, two different answers. Real lenders use affordability models rather than this simplified sum, but the direction is right: the choice of residential lender decides the case. You can test the rental side with our buy-to-let mortgage calculator.

Which lenders offer let to buy mortgages?

Let to buy is a narrower market than standard buy-to-let. Plenty of buy-to-let lenders will not accept it at all, because the borrower is a first-time landlord and the deal depends on a linked purchase. The table below shows published criteria we checked in September 2026. Criteria change often, so treat it as a snapshot and let us confirm the current position on your case.

Lender	Let to buy position (checked September 2026)	Key published criteria
The Mortgage Works (Nationwide)	Accepts	Maximum 80% LTV. Must have owned and lived in the property for at least six months. Copy of the onward residential mortgage offer needed before completion. Proof of personal income needed where the lower 125% ICR is used. Can run alongside a Nationwide residential purchase.
Skipton Building Society	Accepts	Maximum 70% LTV. Minimum £20,000 gross earned income. ICR 125% (basic rate) or 145% (higher rate) at the higher of product rate plus 2% or 5.5% (under 5 year fixes). Assured periodic tenancy required. Consent to let needed first if your existing mortgage is with Skipton.
Leeds Building Society	Accepts (buy-to-let criteria include let to buy)	Criteria effective 24 August 2026. Maximum 80% LTV, 75% for first-time landlords. No minimum income, but a primary income is needed. Assured periodic tenancy in England. Minimum EPC E. Not to be occupied by a family member.
BM Solutions (Lloyds Banking Group)	Accepts	Must be linked to a residential purchase. Not available to first-time buyers. Top slicing not available on let to buy. Onward mortgage offer or conveyancer letter required.
NatWest (residential side)	Residential lender for the onward purchase	Excludes a self-financing buy-to-let commitment from residential affordability; a shortfall is counted as a commitment.
Kent Reliance (OSB)	Not available	Stopped new buy-to-let lending on 17 December 2025. OSB’s specialist buy-to-let range now sits under the Rely brand (formerly Precise).

Beyond these, several specialist and high street lenders consider let to buy case by case. Watch for first-time landlord rules: because most let to buy borrowers have never been landlords, lenders that cap first-time landlords at 75% LTV, or refuse them, shrink the equity you can release. Leeds is a good example, with 80% for experienced landlords but 75% for first-time landlords.

How much deposit and equity do you need?

You need two pots of equity: at least 20% to 30% left in the home you are letting, and a deposit of at least 5% to 10% for the new home, plus stamp duty and costs. On the buy-to-let side, published maximums sit between 70% and 80% loan-to-value (Skipton 70%, The Mortgage Works 80%, Leeds 80% or 75% for first-time landlords), and the rental cover test often caps the loan lower still. On the residential side, deposits start at 5% with some lenders, but many price a second property purchase better at 10% to 15% or more.

Released equity is an acceptable deposit source with most lenders, provided the buy-to-let remortgage completes at the same time as, or before, the purchase. The lender will want proof: the buy-to-let offer, a completion statement and a clear audit trail. The most common question on the forums is a lender asking for “proof of funds” when the deposit does not exist yet because it is locked in the other house. The answer is the buy-to-let mortgage offer, plus a solicitor’s confirmation that both transactions will complete together. Get that paperwork ready early.

Do you pay the 5% stamp duty surcharge on let to buy?

Yes, in almost every case. If you still own your old home when you complete on the new one, the higher rates for additional dwellings apply to the new purchase, even though it is your main residence. Since 31 October 2024 the surcharge is 5% on top of the standard rates in England and Northern Ireland, charged on the whole price. On a £400,000 home that is an extra £20,000.

The surcharge is refundable if you sell or give away your previous main home within 3 years of buying the new one. With let to buy you are keeping it, so you should plan for the surcharge as a permanent cost. If your plans change and you do sell the old home within the 3 year window, you can claim the extra 5% back from HMRC, but not if you or your spouse still own any part of it.

Timing matters in both directions. You cannot avoid the surcharge by completing the buy-to-let remortgage first, because the test is what you own at the moment you complete on the new home. In Wales, Land Transaction Tax higher rates apply, and in Scotland the Additional Dwelling Supplement is 8% since December 2024. Check the current figures with your solicitor before you commit.

What tax do you pay on a let to buy property?

You pay income tax on the rental profit every year, and capital gains tax on the gain when you eventually sell. This section explains the rules at a high level so you can ask the right questions. It is not tax advice. Speak to a qualified accountant before you commit, because the structure you choose on day one is hard to unwind.

Income tax and Section 24. If you own the let property in your own name, you cannot deduct mortgage interest from rental income. Instead you get a tax credit worth 20% of the interest. For basic rate taxpayers this broadly works out the same. For higher and additional rate taxpayers it means paying tax on income that is partly spent on interest. Our guide to reducing tax on rental income covers the legitimate options.

Capital gains tax on your former home. Private Residence Relief covers the gain for the years you lived there, plus the final 9 months of ownership regardless of whether you lived there. The gain for the rented years is taxable at 18% or 24% for residential property, after the £3,000 annual exempt amount. Lettings relief now only applies where you shared the home with a tenant. When you sell, you must report and pay any UK property CGT within 60 days of completion.

What about a limited company? Let to buy on your current home is almost always done in personal names. Moving the property into a company counts as a sale at market value, which can trigger CGT and stamp duty. See our limited company buy-to-let guide for when a company does make sense.

What landlord duties apply under the Renters’ Rights Act?

If your former home is in England, you become a landlord under the new rules from day one. The Renters’ Rights Act came into force for private tenancies on 1 May 2026. Section 21 “no fault” evictions are abolished, and tenancies are periodic rather than fixed term, so the tenant can stay until they give notice or you prove a legal ground for possession. Rent can only be increased once a year through the formal process, and rental bidding is banned.

This matters for let to buy in two ways. First, if you think you might move back or sell, you will need to use the relevant possession ground, give the required notice, and accept that these grounds cannot be used in the early part of a tenancy. A let is no longer a short, easy exit. Second, lenders have updated criteria: Leeds and Skipton both now require an assured periodic tenancy in England. You also need the standard compliance in place before a tenant moves in: a gas safety certificate, electrical safety report, EPC of E or above, deposit protection within 30 days, working smoke and carbon monoxide alarms, and landlord insurance in place of your homeowner policy. Further duties, including a landlord database and ombudsman, are being phased in.

What is the let to buy process and how long does it take?

A let to buy usually takes 8 to 12 weeks from application to completion, similar to a standard purchase, as long as both applications are submitted together. The order matters.

1. Get the rent right. Get a realistic rental figure from a local letting agent before anything else. The whole buy-to-let loan hangs on it.
2. Check your current deal. Find out whether you are in a fixed or discounted period with early repayment charges. Sometimes waiting a few months saves thousands.
3. Structure both sides together. Your broker sizes the buy-to-let loan against the rent and the residential loan against your income, then picks lenders that fit each other.
4. Apply simultaneously. Both applications go in together. Lenders value both properties.
5. Instruct one solicitor for both. Some lenders require it and it makes a same-day completion far easier.
6. Complete both on the same day, with the buy-to-let funds released into the purchase.
7. Move out, then let. Switch insurance, complete safety checks and protect the tenant’s deposit before the tenancy starts.

When the buy-to-let deal ends, you can remortgage it like any other rental property, with the full buy-to-let market open to you as an established landlord.

What are let to buy mortgage rates like?

Buy-to-let rates are normally higher than residential rates at the same loan-to-value, and the buy-to-let side is where the cost of a let to buy sits. Lower loan-to-value bands get the best pricing, and product fees matter more on buy-to-let than on residential: a low rate with a large percentage fee can cost more over two years than a slightly higher rate with no fee. Five year fixes can also help the rental cover test, because several lenders stress five year products at a lower rate.

On the residential side, the new home may be classed as a second property purchase rather than a first home, which changes the product range at some lenders. The Mortgage Works and Nationwide confirm that the onward Nationwide application is eligible for porting, existing customer moving home or home purchase rates. For current buy-to-let pricing, see our guide to buy-to-let mortgage rates.

Why do let to buy applications get declined?

Let to buy cases fail for predictable reasons, and almost every one can be fixed if it is spotted before the application goes in rather than after.

Reason for decline	The fix
Rent does not meet the ICR, often because of higher rate tax status	Reduce the buy-to-let loan, use a five year fix with a lower stress rate, or add savings to the deposit
Valuer down-values the rent	Get two letting agent appraisals up front and size the loan with headroom
Residential lender counts the full buy-to-let payment and the income no longer stretches	Use a residential lender that excludes self-financing buy-to-let commitments
Not owned or lived in the current home long enough	The Mortgage Works needs six months of ownership and occupation; wait, or use a lender with no minimum
First-time landlord caps cut the equity release	Target lenders that allow 75% to 80% LTV for first-time landlords
Deposit source unclear	Provide the buy-to-let offer, solicitor confirmation and a completion plan showing funds flow
Onward property not habitable (a renovation project)	Lenders such as The Mortgage Works require the onward property to be immediately habitable; consider bridging or a different lender
Family member planning to rent the old home	Most standard buy-to-let lenders refuse this; it needs a family buy-to-let lender instead
Minimum income not met	Skipton wants £20,000 earned income; Leeds and others have no minimum, but still want a primary income

A Knox let to buy case (anonymised)

A couple in Stockport came to us wanting to keep their two bedroom terrace and move to a family home nearby. Their first plan, arranged directly with a high street lender, fell over twice. One partner had just become a higher rate taxpayer, so the rent failed the 145% test at the loan they needed, and the residential lender deducted the full buy-to-let payment from their income.

We rebuilt it. The buy-to-let was sized slightly lower on a five year fix, and the difference was covered from savings. The residential mortgage went to a lender that ignores a self-financing buy-to-let. Both completed on the same day, the tenant moved in within a fortnight, and the family paid the 5% surcharge knowing it was a permanent cost rather than a surprise. Details have been changed to protect the clients. Your result will depend on your own circumstances.

Is let to buy right for you?

Let to buy is right when the rent comfortably covers the buy-to-let at the lender’s stress test, your income supports the new mortgage with the buy-to-let in the background, and you have budgeted for the 5% surcharge, tax and landlord duties. It is the wrong move if you are stretching to make the rental cover work, relying on rent to afford your own home, or would be forced to sell if the property sat empty for three months.

If you are weighing it up, we can model both sides of the transaction with real lender criteria before you commit to anything. You will know the maximum you can release, the maximum you can borrow on the new home and the true cost, with no guesswork. You can also read our wider buy-to-let mortgage guide for how the rest of the market works.

Let to buy mortgage FAQs

How much deposit do I need for a let to buy mortgage?

You usually need to keep 20% to 30% equity in the property you are letting, because buy-to-let lenders cap loans at 70% to 80% loan-to-value. For the new home, deposits can start at 5% to 10%, but you also need the 5% stamp duty surcharge and costs. Most people fund the new deposit from equity released on the old home.

Can I release equity from my current home for the new deposit?

Yes. This is the main reason people choose let to buy over consent to let. The buy-to-let remortgage can raise up to the lender’s maximum loan-to-value, subject to the rent passing the rental cover test, and the funds are released on completion to pay your new deposit.

Do I pay the stamp duty surcharge on a let to buy?

Yes, in almost every case. Because you own your old home when you buy the new one, the 5% higher rates apply to the full purchase price. It is only refundable if you sell the old home within 3 years, which let to buy borrowers usually do not plan to do.

Is consent to let cheaper than let to buy?

Usually, yes, in the short term. Consent to let keeps your existing mortgage, avoids new product and legal fees, and avoids early repayment charges. Some lenders add an admin fee or a rate loading. But it is temporary, it cannot release equity, and the lender can refuse or decline to renew.

How much rent do I need for a let to buy?

Typically 125% of a stressed interest payment for basic rate taxpayers and 145% for higher rate taxpayers. On a £225,000 loan stressed at 5.5%, that means £1,289 a month at 125% and £1,495 a month at 145%. The lender’s valuer sets the rent figure used.

Can first-time buyers do let to buy?

No. Let to buy requires you to already own the home you are letting, and lenders such as BM Solutions state it is not available to first-time buyers. If you are buying your first property to rent out, that is a standard buy-to-let application for a first-time buyer, which far fewer lenders accept.

Can I do let to buy through a limited company?

Rarely on your current home. Transferring your home into a company counts as a sale at market value, which can trigger capital gains tax and stamp duty. Most let to buy is done in personal names. Speak to an accountant before choosing a structure.

How long does a let to buy take?

Usually 8 to 12 weeks from application to completion, similar to a normal purchase, provided both applications go in together and one solicitor acts on both. Delays usually come from the rental valuation, the onward chain or an early repayment charge decision on the existing mortgage.

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