BTL (Buy-to-Let)
A mortgage product and business model where a property is purchased specifically to rent out. Buy-to-let landlords are subject to Section 24 of the Finance Act 2015, which replaced mortgage interest relief with a 20% tax credit. Stamp duty is higher on a second property.
At a glance
- Mortgage interest
- 20% tax credit only (Section 24, FA 2015)
- SDLT surcharge
- 5% on BTL purchases (rising in 2026)
- Regulator
- FCA for consumer BTL; otherwise unregulated
Full guide
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Open full guideWhy BTL (Buy-to-Let) matters for landlords
Buy-to-let is the default business model for the vast majority of UK landlords, but the tax and regulatory backdrop has shifted sharply since 2015. Section 24 of the Finance Act 2015 stripped higher-rate relief on mortgage interest and replaced it with a 20% tax credit, changing the math for any leveraged portfolio. Add the stamp duty surcharge, HMRC MTD for Income Tax and new SDLT bands for 2026 and a spreadsheet built pre-2017 is almost certainly producing the wrong post-tax return.
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Official sources
LetCompliance editorial reviews this entry every quarter against the sources above. Always confirm specific duties with a qualified solicitor or your local council.
Related terms
Capital Gains Tax (CGT)
Tax on the profit from selling a rental property. From April 2024 the CGT annual exempt amount was reduced to £3,000 and residential property gains are taxed at 18% (basic rate) or 24% (higher rate). A CGT return must be filed and tax paid within 60 days of completion.
Furnished Holiday Let (FHL)
A short-let property meeting the FHL availability and letting tests (210 days available, 105 days actually let, etc.). Treated as a trade for tax purposes until 5 April 2025, with full mortgage interest deduction, capital allowances on furniture and fittings, and Business Asset Disposal Relief on sale. From 6 April 2025 the FHL regime was abolished by the Finance Act 2024: existing FHLs fall under standard property income rules and Section 24 mortgage interest restriction applies in full.
Mortgage Interest Tax Credit (Section 24)
The 20% basic-rate tax credit that replaced full mortgage interest deduction for individual UK landlords under section 24 of the Finance (No.2) Act 2015. From 6 April 2020, finance costs (mortgage interest, loan interest, mortgage broker fees) are no longer deductible from rental profits; instead HMRC gives a tax reducer at the basic rate, capped at the lower of finance costs, property profits or adjusted total income after personal allowance. Higher- and additional-rate taxpayers are materially worse off than pre-2017; Limited Company landlords are unaffected because Ltd interest remains a fully deductible business expense.
Stamp Duty Land Tax (SDLT)
Tax on property purchases in England and Northern Ireland. Buy-to-let purchases above £40,000 incur a 5% surcharge on top of the standard rates (rising to higher in 2026). Check HMRC for current bands.
Stamp Duty Surcharge (Additional Property)
The additional 5% Stamp Duty Land Tax surcharge (England and Northern Ireland, raised from 3% on 31 October 2024) on the purchase of an additional residential property over £40,000, including most buy-to-let purchases and second homes. Applies on top of the standard SDLT residential bands. A separate 2% non-resident surcharge applies to non-UK-resident buyers. Refundable within 36 months if the previous main residence is sold; rules differ in Scotland (Land and Buildings Transaction Tax + 8% Additional Dwelling Supplement) and Wales (Land Transaction Tax + 4% Higher Residential Rate).
Bailiff (County Court Bailiff / High Court Enforcement Officer)
The court officer who enforces a possession order at the eviction stage. After a landlord wins a possession order under Section 8 (post-1 May 2026 the only route in England), if the tenant does not leave by the date in the order the landlord applies for a Warrant of Possession (CCB) or a Writ of Possession (HCEO). The bailiff or HCEO then attends to take physical possession; only they may lawfully evict, self-help eviction by the landlord is a criminal offence under section 1 of the Protection from Eviction Act 1977.