Buy to Let Mortgage Advice London
Specialist investment property mortgage advice — ICR calculations, company structures, portfolio rules, and London-specific market knowledge.
Get Free BTL AdviceThe Interest Coverage Ratio (ICR) Explained
The Interest Coverage Ratio is the core test lenders apply to determine whether your rental income adequately supports the proposed mortgage. Understanding it is essential before committing to a London buy to let investment.
How ICR works
Stress rate: Most lenders calculate the ICR at a stress interest rate of 5.5%+ — above the actual deal rate
125% ICR for basic rate taxpayers (personal name, lower rate)
145% ICR for higher and additional rate taxpayers (personal name, higher rate)
145% ICR typically for limited company purchases
Example calculation:
A £400,000 buy to let at 75% LTV = £300,000 mortgage. At stress rate 5.5%: monthly interest = £1,375. At 125% ICR, required rent = £1,719/month. At 145% ICR, required rent = £1,994/month.
In London, where rental yields are typically lower than the UK average (3.5–5% gross compared to 5–7% in northern cities), this calculation can restrict the maximum mortgage available on a given property. We model ICR calculations before you make an offer, so you understand your borrowing limits before committing to a purchase.
Limited Company vs Personal Name: Which Is Right for You?
Section 24 of the Finance Act 2015 changed how mortgage interest relief is taxed for landlords. Higher rate taxpayers holding buy to let property in their personal name can no longer deduct mortgage interest in full from rental income — they receive only a basic rate (20%) tax credit. This has significantly increased the effective tax cost of personal ownership for higher earners, driving many investors to use limited company (SPV) structures.
Personal name
- ✓ Generally lower mortgage rates
- ✓ Simpler administration
- ✓ Can use allowances (mortgage interest tax credit)
- ✗ Section 24 restriction on interest relief for higher rate taxpayers
- ✗ Rental profit taxed at marginal income tax rate
Limited company (SPV)
- ✓ Full mortgage interest deductible as business expense
- ✓ Corporation tax (19-25%) on profits, not income tax
- ✓ Profits can be retained within the company
- ✗ Higher mortgage rates (+0.1–0.3%)
- ✗ Additional admin (annual accounts, corporation tax returns)
- ✗ Extracting profits incurs dividend tax on top of corporation tax
Portfolio Landlord Rules (4+ Properties)
Since 2017, lenders are required to apply additional underwriting criteria when lending to portfolio landlords — those with four or more mortgaged buy to let properties. This applies whether the properties are in personal name or in a limited company, and whether or not you are adding a fifth property or remortgaging an existing one.
Portfolio assessment means the lender looks at your entire portfolio — all properties, all mortgages, all rental income — and assesses whether the portfolio as a whole meets their ICR requirements. It also requires a more detailed business plan and asset and liability statement.
What portfolio landlords need to provide
- ✓ Details of all mortgaged buy to let properties
- ✓ Outstanding balances on each mortgage
- ✓ Monthly rental income for each property
- ✓ Void periods and ongoing costs estimate
- ✓ A property schedule (we help you prepare this)
- ✓ Asset and liability statement
London BTL: Yield, Location, and the Commuter Belt
London is a world-class city for long-term property investment, but it requires careful yield analysis. Prime central London — Kensington, Chelsea, Westminster — offers capital preservation and international demand, but gross yields of 2–3% can make the ICR calculations challenging for leveraged investors.
For investors seeking rental yield alongside capital growth potential, Zones 3–4 and the Elizabeth line corridor offer the better combination. Areas like Barking, Stratford, Ilford, Croydon, and Hounslow typically deliver 4–5.5% gross yields, which work better in ICR calculations while still benefiting from London's long-term price trajectory.
Commuter towns just outside Greater London — Chelmsford, Basildon, Dartford, and Watford — can offer even stronger yields at lower purchase prices, particularly for investors targeting the tenant market of London workers priced out of Greater London. We advise on the mortgage options for all these areas.
How the Buy to Let Advice Process Works
ICR modelling before you offer
We run ICR calculations for any property you're considering — working out your maximum mortgage based on expected rental income, before you commit to a purchase.
Structure advice
We advise on personal name versus limited company, considering your tax position, long-term plans, and the specific lenders available for each structure.
Market search — BTL-specialist lenders
We search 90+ lenders including specialist buy to let providers not available direct, comparing rates, fees, ICR calculations, and portfolio-friendliness.
Application and completion
We submit your application, manage the valuation and legal process, and handle any queries from the underwriter — keeping you updated throughout to completion.
What You Need to Know About Buy to Let in London 2026
London buy to let remains one of the most nuanced areas of the mortgage market in 2026. The combination of higher property values, lower rental yields relative to other UK cities, and the tax changes introduced through Section 24 means that the economics of London investment property require careful analysis before and throughout the investment.
The interest rate environment has improved for buy to let investors since the peak of 2023, but rates remain meaningfully higher than the pre-2022 period. For existing landlords, remortgaging onto a new deal is often the most pressing priority — many who fixed at lower rates are now seeing significant payment increases as their deals expire. We model the impact of rate changes on portfolio profitability as part of our advice.
For new investors entering the London market, the choice of property type matters significantly. HMOs (Houses in Multiple Occupation) offer higher gross yields but require licensing and specialist mortgages. Holiday lets in London benefit from different tax treatment but require licensing. Standard residential lets in the Zones 3–4 corridor remain the most straightforward entry point — readily financeable, liquid, and benefiting from consistent tenant demand.
The limited company route has become increasingly popular for higher rate taxpayers since the Section 24 changes. Special Purpose Vehicles (SPVs) — companies set up specifically to hold property — can now access a wide range of lenders at rates that, while slightly higher than personal name, are competitive within the specialist sector. The payback period on the additional tax advantage versus the higher rate depends on your marginal tax rate and the specific property values involved.
If you already own four or more mortgaged buy to let properties, you fall into the ‘portfolio landlord’ category. Lenders must assess your entire portfolio — not just the new property — against their ICR requirements. This creates complexity but also opportunity: lenders whose portfolio criteria your existing portfolio meets are the ones to target, and we know which they are.
Energy Performance Certificate (EPC) requirements are also relevant for London landlords. Current guidance requires rental properties to achieve EPC rating E or above. Proposals to require EPC C by 2028 remain under consultation, but landlords acquiring properties with lower EPC ratings should factor in potential improvement costs. Some lenders now offer ‘green’ buy to let products at preferential rates for properties rated EPC A or B.
Buy to Let FAQs
What is the interest coverage ratio (ICR) for buy to let mortgages?
The ICR is the test lenders use to assess whether rental income adequately covers the mortgage. Lenders typically require 125% for basic rate taxpayers and 145% for higher rate taxpayers, calculated at a stress rate of 5.5%+. London's lower yields can constrain maximum borrowing — we model this before you make an offer.
Should I buy a London investment property in personal name or a limited company?
This depends on your income tax position, long-term plans, and whether you need income immediately. Section 24 means higher rate taxpayers cannot deduct mortgage interest in full personally, making limited companies more attractive. However, company mortgages have higher rates and there are extraction costs. We strongly recommend tax advice alongside our mortgage advice.
What are the portfolio landlord rules for 4+ properties?
If you have four or more mortgaged buy to let properties, lenders must assess your entire portfolio — all properties, all mortgages, all rental income. We help you prepare the required portfolio schedule and identify lenders whose portfolio assessment criteria your portfolio meets.
What deposit do I need for a buy to let mortgage?
Most buy to let lenders require 25% deposit (75% LTV). Some lend at 20% though rates are less competitive. The 25% deposit is standard and gives you the widest range of lender options and most competitive rates.
What are London's best areas for buy to let investment?
For yield, Zones 3-4 and the Elizabeth line corridor — Barking, Stratford, Ilford, Croydon — offer better returns than prime central London. Commuter towns just outside Greater London can deliver even stronger yields. We model ICR calculations for any area you're considering before you commit.
Can I use rental income from my existing properties to support a new buy to let application?
Yes. For portfolio landlords, rental income from existing properties is considered as part of the overall portfolio assessment. However, lenders apply their ICR requirements across the entire portfolio, so if existing properties have high LTV mortgages or low rental yields, this can affect what you can borrow on a new purchase.
What is the stamp duty surcharge for buy to let properties?
Additional properties attract a 3% stamp duty surcharge on top of standard rates. On a £400,000 investment property, this means paying stamp duty at 3% on the full amount (£12,000) plus the standard rate on the relevant bands — approximately £22,000 total. We include this in the full cost-of-purchase analysis.
Can I convert my residential mortgage to a buy to let?
If you wish to let out your residential property, you need either a consent to let from your current lender or to switch to a buy to let mortgage. Most residential mortgages prohibit letting without permission. We advise on the most cost-effective way to make the switch, considering ERC, rates, and timing.
Important:
Your home may be repossessed if you do not keep up repayments on your mortgage.
Buy to let mortgages are not regulated by the Financial Conduct Authority.
Need buy to let mortgage advice in London?
Free initial advice from Roger Cooper CeMAP — ICR calculations, structure advice, and 90+ lender access.
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