Last reviewed: June 2026
TL;DR- Let-to-buy involves converting an existing residential mortgage to a buy-to-let product on the current home, then taking a new residential mortgage on a new property.
- Both mortgages are assessed simultaneously - lenders consider the combined debt and whether rental income from the let property covers the BTL mortgage.
- The stamp duty additional property surcharge applies to the new residential purchase because the borrower still owns the let property.
- Capital gains tax may apply when the let property is eventually sold, as it will have been used as a rental property for part of the ownership period.
What Is Let-to-Buy?
Let-to-buy is a strategy where a homeowner converts their existing residential mortgage to a buy-to-let mortgage so they can rent out their current home, then simultaneously takes out a new residential mortgage to purchase a new property to live in. It is most commonly used when the homeowner cannot or does not want to sell their existing property before moving.
The process typically involves two mortgage transactions happening at the same time: a product transfer or remortgage of the existing property to a buy-to-let product, and a new residential mortgage application on the new property. Some lenders specialise in arranging both transactions simultaneously.
Lender Assessment for Let-to-Buy
Lenders assessing a let-to-buy application consider both the buy-to-let element and the new residential mortgage simultaneously. The key criteria include:
- Rental income coverage: the rental income from the let property must meet the lender's coverage ratio - typically 125-145% of the BTL mortgage payment at a stressed rate.
- Personal affordability: the borrower must demonstrate they can afford the new residential mortgage from personal income, assessed against FCA MCOB affordability rules.
- Equity in the existing property: most lenders require at least 25% equity in the property being let, to meet standard BTL LTV requirements.
- Combined debt: the total debt across both properties is considered in the overall assessment.
Stamp Duty Implications
Because the borrower still owns the let property when they purchase the new residential property, the additional property stamp duty surcharge applies to the new purchase. This is the case even though the new property will be the borrower's main residence. HMRC's rules on the additional dwelling surcharge apply based on ownership at the date of completion of the new purchase, not on the borrower's intended use of each property.
If the let property is subsequently sold within three years of the new residential purchase, a refund of the additional stamp duty surcharge paid on the new purchase may be available. The precise rules and time limits are set out on GOV.UK.
Capital Gains Tax Considerations
When the let property is eventually sold, capital gains tax (CGT) may apply to any gain accrued during the period when the property was used as a rental property. Private residence relief (PRR) is available for the period when the property was the owner's main home, and for the final nine months of ownership regardless of use. CGT rates for residential property disposals by individuals are set by HMRC. Landlords should seek specialist tax advice before selling a property that has been let, as the interaction of PRR, letting relief (now restricted to periods of shared occupancy) and CGT can be complex.
Consent to Let as an Alternative
Some lenders offer consent to let as an alternative to a full conversion to a buy-to-let mortgage. Consent to let is permission from the existing residential lender to rent out the property temporarily without changing the mortgage product. It is typically granted for a defined period and may carry a fee or rate increase. Consent to let is a simpler and often cheaper option for borrowers who plan to let for a short period and then sell or return to the property, but it is not always available and terms vary significantly between lenders.
Frequently Asked Questions
Can I use the rental income from my let property to help afford the new residential mortgage?
Some lenders will consider a proportion of the rental income from the let property when assessing affordability for the new residential mortgage. The extent to which rental income is factored in varies by lender - some count 70-80% of expected rental income, others do not include it at all in residential affordability calculations. A whole-of-market broker can identify lenders with the most favourable approach for specific circumstances.
Do I need to notify HMRC when I start renting out my property?
Yes. Rental income from a let property must be declared to HMRC via a self-assessment tax return. If the rental income, after allowable deductions, results in a tax liability, this must be paid by the self-assessment deadline. HMRC's property income pages on GOV.UK set out the rules for calculating rental income and allowable expenses.
Is let-to-buy the same as buy-to-let?
No. Buy-to-let refers to purchasing a property specifically to rent out as an investment. Let-to-buy refers to converting an existing residential property to a rental property when the owner moves to a new main residence. The mortgage products used for the let property in both cases may be similar, but the circumstances and the simultaneous residential mortgage element are specific to let-to-buy.
What happens if I cannot find a tenant for the let property?
If the let property is vacant and not generating rental income, the borrower must still meet the BTL mortgage payments from other sources. Lenders do not suspend BTL mortgage payments during void periods. Mortgage protection insurance for landlords - covering rental income during void periods or tenant default - is available from specialist insurers, though terms and conditions vary significantly.
