Let to buy: keeping your home and buying another.

Let to buy is not buy to let

The two names are one word apart and describe opposite situations, which is why the confusion is so common that half the guides on the subject open by untangling it.

Buy to let is buying a property in order to rent it out. You never live in it; it is an investment from the first day, and the lending is usually business lending.

Let to buy is keeping the home you already live in, renting it out, and buying somewhere else to live. The property was your home first, and that single fact changes how it is regulated and which lenders will touch it.

There is a third thing it is not. Porting is taking your existing mortgage deal with you to a new house and selling the old one. Let to buy is keeping the old one. If you are moving and want to hold on to something, those are your two options, and they are not interchangeable.

The part that surprises people: it is usually regulated

Most buy-to-let is business lending and sits outside the ordinary mortgage rules. Letting out a property you have lived in yourself is generally different — it usually falls under consumer buy-to-let: FCA-registered lending with conduct standards and complaint rights closer to a residential mortgage than to the unregulated business lending most buy-to-let is.

That matters because people arrive assuming buy-to-let means lighter checks and a quicker answer, and this is the one flavour where the opposite is true. It also means fewer lenders, and fewer again once there is adverse credit in the picture.

Two mortgages, and both have to work

On the house you are keeping: either permission from your existing lender to let it out — consent to let, usually temporary and at their discretion — or a remortgage onto a proper let-to-buy product. The second is the usual route when the arrangement is permanent, and it often releases deposit for the purchase.

On the house you are buying: an ordinary residential mortgage, assessed while you are also responsible for the first one. Some lenders will disregard the old mortgage if the rent covers it comfortably; others count part or all of it against what you can borrow. That single difference in policy often decides whether the whole plan works.

How the rent is actually tested

Nearly everyone arrives having done the same sum: the rent is more than the mortgage payment, so it must be fine. Lenders do not assess it that way, and the gap between those two methods is where most let-to-buy plans fall over.

What they apply is a rental cover calculation. The rent has to exceed the mortgage interest by a margin, and — this is the part that catches people — the interest is not necessarily the rate you would be paying. Lenders stress-test it at a notional higher rate, to satisfy themselves the arrangement still works if rates rise. So a property whose rent comfortably covers today's payment can still fail, on a rate nobody is being charged.

Two things move the answer. The margin required differs from lender to lender, and it is usually stricter for a higher-rate taxpayer than a basic-rate one, because the tax treatment of rental income changed and lenders followed. And the rent figure they use is the surveyor's opinion of the market rent, not what a tenant has agreed to pay you.

None of which can be worked out from a website, including this one. It is the single most useful thing to check before you commit to anything, because it is the calculation most likely to end the plan.

Both completions usually land on the same day

The remortgage of the house you are keeping and the purchase of the one you are moving to normally have to complete simultaneously, because the let-to-buy remortgage is often what releases the deposit for the onward purchase. The money has to exist before it can be spent, and both transactions are waiting on each other.

That has practical consequences. Two lenders, two sets of solicitors and usually a chain all have to arrive on one date, and a delay on either side moves both. It is worth using one solicitor across both transactions where you can, and worth telling everyone involved at the outset that the two are tied — it is not obvious from either file on its own.

Where adverse credit bites twice

You need a lender comfortable with your credit history for the let, and one comfortable with it for the purchase — and they will not always be the same lender or even the same tier of the market. Arranging them in the wrong order, or applying to a lender who was never going to take both, costs weeks and leaves searches on your file.

This is a case where doing it as one planned sequence rather than two separate applications genuinely changes the outcome.

Things worth knowing before you commit

• Consent to let is not permanent. If the plan is long term, build it on a proper product rather than a temporary permission that can be withdrawn.
• Expect a bigger deposit requirement on the let than on a residential.
• The rent has to stand up to the lender's own stress calculation, not just cover the payment.
• There are tax and stamp duty consequences to owning two properties. I am not your accountant and will not pretend to be — but do not make this decision without asking one.
• Letting a property brings obligations: gas and electrical safety certificates, an energy performance certificate, protecting the tenant's deposit in an approved scheme, and, in England, the right-to-rent checks. In England some councils also operate selective licensing, which means you need a licence to let at all in certain streets; in Wales and Scotland every landlord must register. Worth checking yours specifically rather than assuming.
• You owe both mortgages whatever happens. If the tenant stops paying or the house sits empty, both payments are still due, and both homes are security for them.
• Becoming a landlord twice over changes things again. Own enough rental property and lenders begin treating you as a portfolio landlord, with a different and heavier assessment. That is a problem for later, but it is worth knowing it exists before the first one.

If the honest answer is that selling is simpler and cheaper for you, I will say so.