Costs to consider
- Stamp duty (Land and Buildings Transaction Tax in Scotland) and legal fees, including surveys / valuations
- You will need a deposit in order to secure a mortgage
- Obtaining compulsory inventories, gas and electricity safety certificates
- The cost of any minor repairs required before tenants move in
- Furnishing costs – you can choose to let your property out with or without furniture and your rental price will probably reflect this
- Refurbishment and development costs if you plan to buy a property to improve or update
- Letting agents – you may choose to find your tenants with the help of an agency, who will charge for this service
- Maintenance and repair of the property in the long-term
- Void periods - there may be periods where you don’t have a tenant so your mortgage payments won’t be covered by rental income. In order to make sure you can still meet your monthly payments, you should aim to raise rental income of at least 145% of your mortgage payments – most lenders will require proof of this affordability when considering your application.
- Landlords insurance
- If you decide to use a management agency to help with the ongoing management then they will charge a fee for this
Choosing the right property
Rental returns are important to consider before you buy so study the local area and try to buy in a location that you know will be attractive to prospective tenants. Things that will make a property more attractive are:
- Walking distance from public transport
- Good commuter links to the nearest city or town
- Close to hospitals or Universities
- For family rentals being close to good schools
- If you plan to furnish your property you should consider the quality of your fixtures and furnishings – whilst it may be more costly upfront, better quality décor will attract tenants and also last longer.
If you are just starting out as a landlord you might want to go for a low maintenance property so you have less to worry about. For example, flats can be great for first time landlords as its unlikely you’ll have to think about the building structure and problems on the roof as this will be the responsibility of the freeholder.
If you decide to move out and rent your current residential property you'll need to get permission from your current lender and make your insurer aware. Depending on your lender and your individual circumstances, you may have to switch to a buy-to-let loan, but this isn’t always the case.
Choosing your tenants
Finding good tenants isn’t something you should take lightly; after all they will be living in and essentially looking after your property.
Make sure you have researched the rental market in your area so you can set a realistic rental price for the size and location of your property. You can look online and in local newspapers to get an idea of what other people charge.
You should make sure you get a deposit and confirm the tenants can pay this upfront. Typically this will be at least one month's rent (some landlords insist on more) to safeguard yourself against any damages, or if the tenants move out unexpectedly you have money available to make your mortgage payments. Landlords are no longer entitled to hold tenants' deposits; they are now held in a tenancy deposit protection scheme so you will need to set this up and provide the tenant with details of it within 14 days of taking their deposit.
In addition to the points referenced in the 'choosing your property' section, paying attention to the details of the interior of your property will go a long way when it comes to attracting tenants. No matter how buoyant the rental market becomes, you should always make sure your property is in the best possible condition so you can attract quality tenants.
If you already have tenants in whilst prospective tenants are viewing your property, make sure they clean and tidy up, and ask for all of the furniture to be in the original position.
Handy tip: Decorate with neutral colours so that this will work with whatever colour scheme your potential tenants may already have, (e.g. their bedding, ornaments etc). Also, flowers and scented candles are a nice touch to make the place smell fresh and homely.
It's important to get personal and professional references, to make sure you're comfortable with your new tenants. You may even want to think about running a credit check to make sure they will be able to make their rental payments, as well as to verify they are who they say they are. The National Landlords Association offers a tenant check that includes bankruptcy and county court judgement searches.
If you're busy and worried about the time it may take to find and vet tenants then you may wish to consider help from a letting agent. They will usually charge a fee as a percentage of the tenant’s total rent. Typically they’ll provide all or some of the following:
- Find and fully vet prospective tenants
- Draw up a suitable tenancy agreement
- Advise on and arrange inventory and condition reports
- Help with changes to utility accounts and council tax
- Carry out a market appraisal to assess the rent the property will fetch
- Collect rent and pay the money to you
If you do decide to use a letting agent, it’s still worth meeting the tenants yourself to make sure you're happy and have established contact from the start.
Other things to consider
Before you invest in a buy-to-let property, there are certain requirements and responsibilities you need to think about.
As a landlord, you must:
- Understand and comply with the legal requirements, including health and safety obligations towards the tenant and any licensing or registration rules.
- Treat your tenants fairly.
- Understand the consequences of being unable to comply with your obligations under a buy-to-let mortgage. We will have the power to take possession of and sell the property to secure repayment of the loan, or appoint a receiver of the property, if you are unable to comply with your obligations.
- Think about how you will pay your mortgage and other costs during ‘void periods’ when your property is empty and you do not receive any rental income.
- Protect the value of your property by keeping it well maintained and, for a leasehold property, meeting valid requests from the freeholder and/or the managing agent.
- Make sure you have appropriate buildings insurance in place, from the day your mortgage completes and throughout the mortgage term.
You can find more information on the following websites:
- The maximum LTV is 80% or 75% for BTL portfolio landlords
- Our mortgages are available for single properties up to a maximum loan amount of £1 million. Where the LTV is greater than 75% the maximum loan size is £350,000. The total value of all buy-to-let properties held with Virgin Money can be up to £3 million. The maximum number of mortgaged buy-to-let properties you can hold altogether is five.
- Affordability will be based on rental income of at least 145% of the mortgage interest and this will be calculated in one of the following ways:
- All products, with the exception of five year fixed rate, will be calculated at the product rate +2% or a notional rate of 5.50%, whichever is higher.
- Five year fixed rate products, will be calculated at 4.5%.
If there is a rental shortfall between 100% and 145%, we will consider your personal income to cover this. Personal income is not considered for BTL portfolio landlords, LTVs greater than 75%, or where the term extends beyond 75 years of age.
If remortgaging a buy-to-let property and additional borrowing is not required, this will be calculated at a rental income of 125%, plus stress test interest rate of 5.00% across all products.
- We require a minimum income of £25,000 which we will verify in all cases. If your application is in joint names, the combined minimum income will also be £25,000. Where personal income is used for affordability, a minimum combined gross income of £50,000 is required.
- You can choose the type of mortgage repayment that is best for you. This could be interest only, Capital repayment or part-and-part.
- The minimum age for the main applicant looking to apply for one of our buy-to-let mortgages is 21 and there can be up to four applicants for each mortgage.
- We do not accept BTL applications for first time buyers. For joint applications, at least one applicant must have been an owner occupier for at least 6 months on the date of decision, and we may request evidence of this.
- If you are remortgaging your main residence on to a buy-to-let loan you must simultaneously complete on the purchase of a new residential property.
- Some of our buy-to-let products offer a cashback incentive to help you cover the costs of buying a new property or taking out a new mortgage. Cashback amounts may vary across the range, simply refer to our buy-to-let range for full details. Please note, the cash back will be paid upon completion of your mortgage.
- Our buy-to-let mortgages are available to individuals only. Currently, we do not offer buy-to-let mortgages to companies.
- The maximum term for a buy-to-let mortgage is 35 years.
- The minimum property value for loans up to 75% LTV is £50,000. For loans greater than 75% LTV, the minimum property value is £100,000.
Frequently asked questions
Introduced by the Mortgage Credit Directive and expected to impact a small proportion of existing buy-to-let customers by offering some additional consumer protections, such as the Financial Ombudsman Scheme, depending on the customer's individual circumstances.
At Virgin Money, our entire buy-to-let mortgage product range is available to consumer buy-to-let customers. The standard buy-to-let lending criteria will also apply.
We will determine during the loan application process whether the loan is buy-to-let or consumer buy-to-let.
If you have any questions please contact us and we'll be happy to help.
A mortgage offer is valid for 26 weeks or 30 weeks for a new build property. To see what mortgages we currently have on offer, including what your monthly payment could be, use our mortgage finder or call us to speak to one of our mortgage experts.
If you are buying a new home then you will have to pay for a valuation of the property.
|Purchase Price||Valuation Report Fee|
|up to £60,000||£112|
|£60,001 - £100,000||£132|
|£100,001 - £150,000||£163|
|£150,001 - £200,000||£188|
|£200,001 - £250,000||£214|
|£250,001 - £500,000||£275|
|£500,001 - £750,000||£331|
|£750,001 - £1,000,000||£377|
|£1,000,001 - £1,500,000||£510|
|£1,500,001 - £2,000,000||£663|
|£2,000,001 - £2,500,000||£817|
|£2,500,001 - £3,000,000||£970|
|Over £3,000,000||By Negotiation|
For residential and buy-to-let properties over £3m, Virgin Money will negotiate the cost of the Valuation Report with our Suppliers.
A Mortgage Valuation Report helps us to assess the property as security for your mortgage, and will be used for the purpose of agreeing the mortgage.
A surveyor may be asked to carry out a physical valuation or a remote valuation without visiting the property. The cost to Virgin Money may differ from the fee charged. There is an administration fee included within the valuation fee.
It's important to remember that this valuation is only for our purpose, and you may still want to consider instructing a survey to provide you with a more detailed assessment of the condition of the property.
You can find more information on the types of surveys available on the Royal Institution of Chartered Surveyors website. If you do decide to instruct your own survey, this will be a separate contract between yourself and your chosen survey provider with additional fees applying.
Please note, the valuation fee(s) above are based on the actual property valuation.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE