Buy to let continues to be a popular choice for people in Leicester looking to build long-term wealth or generate an extra source of income. Whether you’re a first time landlord or growing an existing property portfolio, the idea of owning a rental property can be appealing – but is it the right move for you?
From rental yields to market trends, there’s a lot to consider. In this guide, we’ll look at what makes buy to let an attractive investment, where the risks lie, and how to decide whether it suits your goals.
What is a buy to let in Leicester?
A buy to let is a type of property investment where you purchase a home specifically to rent it out, rather than live in it yourself. It’s popular with people looking to generate rental income, benefit from long-term property growth, or diversify their investments.
Unlike a standard residential mortgage, buy to let mortgages in Leicester are designed for landlords. They come with different criteria, including larger deposit requirements and a focus on the rental income the property is likely to produce.
Whether you’re buying your first rental property or adding to a portfolio, understanding how buy to let works is a key part of deciding if it’s the right investment for you.
Why do people invest in buy to let properties?
One of the main attractions is the potential for a steady income stream. Renting out a property can bring in monthly payments that, once costs are covered, provide an additional source of earnings. For many landlords, this rental income helps support their lifestyle or contributes to future savings.
There’s also the long-term value of the property itself. If house prices rise over time, your investment could grow in value. Some people see this as a way to build wealth that can be passed on or used later in life.
Others invest in buy to let as part of their retirement planning. Owning a property can offer more control than relying solely on pensions or other traditional investments. It gives some people a sense of stability, knowing they’ve got a physical asset behind them.
The Benefits of Buy to Let in Leicester
A buy to let property can offer a number of advantages, especially if you’re looking for a long-term investment that offers both income and growth potential.
Rental Income
The biggest draw for most landlords is the rental income. Once the mortgage and property running costs are covered, the remaining rent can provide an ongoing monthly return.
In areas like Leicester where demand for rental properties is strong, this can become a reliable source of additional income.
Capital Growth
Over time, your property may increase in value. This long-term capital growth can be a major benefit, especially if you choose to sell the property in the future.
While house prices can go up and down, many landlords take a long-term view, aiming to benefit from rising values over several years.
Flexibility
You’re in control of your investment. You choose the property, the area, and the type of tenants you want to attract.
Some people buy one property, others build a portfolio, it’s up to you how much you want to commit.
You can also remortgage a buy to let property in future to release equity for another investment or project.
Tangible Asset
Unlike shares or funds, a property is something physical that you can see and manage.
For many, this makes the investment feel more secure, especially if they have experience with property or want more hands-on involvement.
The Risks of Buy to Let in Leicester
While buy to let can offer strong returns, it’s not without risks. Understanding what could go wrong is just as important as knowing the potential rewards.
Void Periods
One of the most common challenges is dealing with periods when the property is empty. If you don’t have tenants, there’s no rental income but your mortgage and other costs still need to be covered. Planning for these gaps is essential.
Unexpected Costs
As a landlord, you’re responsible for repairs, maintenance and keeping the property safe and compliant.
Things like boiler breakdowns or emergency repairs can come out of the blue, so it’s wise to budget for ongoing costs beyond your mortgage.
Property Market Fluctuations
Just like any investment, property prices can go up or down. If the market dips, the value of your property might fall below what you paid for it.
This matters most if you need to sell during a downturn or refinance when values are lower.
Regulation & Tax Changes
The rules around buy to let can change, including how rental income is taxed and what landlords must provide for tenants. Keeping up with these changes – and factoring in any extra costs – is important for long-term success.
Buy to let can still be a solid investment, but it’s important to go in with your eyes open. The next section will look at whether buy to let still makes sense in 2024.
Buy to Let Criteria
Getting a buy to let mortgage in Leicester is a bit different from a standard residential one. Lenders have their own set of criteria, and it’s worth knowing what they look for before you get started.
Larger Deposit Requirements
Buy to let mortgages usually need a bigger deposit than residential ones. Most lenders ask for at least 25 percent, though some may accept slightly less depending on the deal.
The more you can put down, the better your chances of securing a competitive rate.
Rental Income Expectations
Instead of looking purely at your personal income, lenders will also assess how much rent the property is likely to generate. In most cases, they’ll want the rental income to cover around 125 to 145 percent of the mortgage repayments.
This gives them a buffer in case costs rise or the property sits empty.
Experience Matters – But It’s Not Essential
If you’re a first-time landlord, getting a buy to let mortgage in Leicester can sometimes be trickier. Some lenders prefer applicants who already own a residential property, while others may ask for a higher deposit or apply stricter criteria.
That said, it’s not impossible – there are still options out there, especially with the support of a mortgage advisor.
Credit History & Personal Income
Even though rental income plays a key role, lenders still take your credit history and personal income into account.
They want to know you’re financially responsible and able to cover the property during any unexpected gaps in tenancy.
If you’re new to the buy to let market or not sure where you stand, our mortgage advisors in Leicester can help you understand the requirements and find lenders who are more open to first time landlords. Get in touch and explore your options during a free buy to let mortgage appointment with one of our experts.
What Should You Consider Before Buying a Rental Property?
Buying a property to rent out can be a rewarding move, but it’s not just about finding a place and handing over the keys.
There are a few important factors to weigh up before committing to a buy to let investment.
Location
Where the property is based can make a huge difference. In Leicester, areas close to universities, hospitals, and transport links tend to be popular with tenants.
Researching the local rental market helps you understand demand, rent levels, and the types of tenants you’re likely to attract.
Type of Tenants
Think about who you want to rent to, for example, your tenants could be students, professionals, families or even short-term lets. Each group has different needs and expectations, which can influence the type of property you buy and how you manage it.
Ongoing Costs
It’s not just the mortgage to think about. You’ll also need to budget for repairs, safety checks, insurance, and any periods where the property is empty.
Having a financial buffer can give you peace of mind if unexpected costs pop up.
Legal Responsibilities
As a landlord, you’ll need to follow the rules around safety, deposits, and tenant rights. This includes things like gas safety certificates, energy performance ratings, and making sure the home meets housing standards. Staying on top of these legal requirements is a key part of being a responsible landlord.
Taking the time to plan carefully means you’re more likely to enjoy a smooth and successful buy to let experience. If you’re not sure where to start, we can help you look at the numbers and the bigger picture.
Date Last Edited: May 30, 2025
