Buy-to-let mistakes and first-time landlord advice

This guide breaks down what you need to know before renting out your first buy-to-let property - so you can minimise risk, avoid costly mistakes, and manage your property portfolio with confidence.

Key takeaways

• Many landlords forget to budget for non-mortgage expenses such as repairs and insurance

• Landlords need to understand the latest rules and regulations for the private rental sector

• Letting agents can help with property management - but fees will eat into profits

• Budgeting tools can help first-time landlords avoid common mistakes

Common mistakes first time buy-to-let landlords make

Not factoring in expenses

A lot of first time landlords focus only on the mortgage and forget about the additional expenses that come with renting out a property. Repairs, voids, insurance, safety checks and agent fees all add up. Without planning for these, your returns can be much lower than expected.

Many buy-to-let landlords forget to budget for:

• Repairs and maintenance

• Voids (periods with no rent)

• Insurance

• Letting agent fees

• Remortgage fees

• Safety certificates and compliance checks

• Higher interest rates on buy-to-let mortgage products

• Tax on rental profits

Choosing the wrong location or property

Many first-time landlords pick a property based on where they would like to live, rather than the type of property tenants actually want.

To make a sound investment, it’s essential to focus on factors that drive rental demand. Consider local employment opportunities, transport links, the type of tenants the area attracts, and whether the property can achieve realistic rental yields. These elements will have a far greater impact on your success than personal preference.

Setting the rent at the wrong level

First-time landlords often make the mistake of overestimating or underestimating the rent their property can realistically achieve. Ignoring local property market comparisons can lead to prolonged void periods if the rent is too high, or reduced profits if it is too low.

Researching similar properties in the area and understanding tenant expectations is key to setting a fair and achievable rental price.

Not understanding legal duties

Landlords can be fined if they break certain rules relating to letting property. So it’s vital to understand your legal responsibilities.

Common oversights include:

• Missing gas and electrical compliance checks

• Not protecting the tenant’s deposit in a government-approved scheme

• Failing to issue legally required documents (How to Rent guide, EPC, EICR, gas certificate)

• Not meeting local authority rules about HMO / other property licences

Poor tenant selection

Selecting the wrong tenant can create serious problems for landlords, including late or missed rent payments, property damage, legal disputes, and anti-social behaviour.

Conducting thorough tenant screening - such as checking references, verifying income, and running credit checks - helps reduce these risks and ensures a more reliable, responsible tenant for your property.

Trying to self-manage without knowledge

Many first-time landlords underestimate how much work is involved in property management. Tasks such as tracking rent and keeping up with constantly changing regulations can quickly become overwhelming.

Without proper knowledge or systems in place, self-management can lead to financial issues, compliance problems, and increased stress.

A letting agent can manage a rental property for you - but this will come at a cost.

Joining a landlord organisations, such as the National Landlords Association, can help you keep up with changing rules and regulations.

Lack of time and reliable tradespeople

Many new landlords underestimate the time required to respond promptly to tenant queries and keep a rental property in good condition.

Without a reliable network of tradespeople, repairs can be delayed, leading to tenant dissatisfaction, potential legal issues, and even further property damage.

Being prepared with trusted contractors can help ensure maintenance is handled efficiently and professionally.

Not considering the tax impact

Some first-time landlords overlook the tax implications of renting out a property, which can significantly affect profitability. It’s important to understand income tax on rental profits (this will go up from April 2027), the rules around section 24 mortgage interest, and potential capital gains tax when selling. This can add up to a significant tax bill.

Equally crucial is knowing which expenses are allowable, such as repairs, letting agent fees, and insurance, to ensure you maximise your returns and remain compliant.

Expert advice for managing a buy-to-let effectively

Treat it as a business

Your rental property should be viewed as an investment, not a hobby. Keep detailed written records, maintain a dedicated savings pot for repairs and maintenance, and create a business plan to track income, expenses, and profitability. If you have several rental properties, it may be worth setting up a limited company.

Conduct proper tenant referencing

A lot of landlord mistakes are down to their choice of tenant. Thorough tenant referencing of potential tenants is essential to reduce risk and protect your investment.

Always check employment and income, verify previous landlord references, run credit checks, and carry out Right to Rent checks.

Using reputable referencing services or a letting agent can help ensure you select reliable tenants.

Keep on top of maintenance

Staying proactive with property maintenance is crucial for long-term success. Rental properties tend to have more wear and tear than owner-occupied properties.

Responsive upkeep protects your investment, reduces costly repairs over time, and keeps tenants satisfied. This, in turn, helps minimise turnover and vacancy periods.

Weigh up whether to use a letting agent

Deciding whether to manage your property yourself or use a letting agent is a key consideration for first-time landlords. Letting agents can take on many time-consuming tasks, including advertising your property, vetting tenants, collecting rent, and ensuring legal compliance. Their expertise can help reduce risks, particularly if you are unfamiliar with landlord regulations or do not have the time to manage day-to-day issues.

Using an agent can be especially valuable if you have multiple properties, live far from your rental, or want to minimise stress. They can also provide access to professional networks, including maintenance contractors and legal advice, which can save you time and potential costs.

If you choose to self-manage, it’s essential to understand the rules thoroughly. You will be responsible for compliance, tenant management, rent collection, and handling maintenance issues yourself. Careful planning, record-keeping, and a clear understanding of your responsibilities are vital to ensure smooth operation and protect your investment.

Maintain a compliance calendar

Keep track of:

• Gas safety certificate (annual)

• EICR (every 5 years)

• Smoke and CO alarm requirements

• EPC rating requirements

• Deposit protection deadlines

• Budgeting, tax, and money management

• Paperwork you need to give to new tenants

Creating a realistic budget is essential for a successful buy-to-let investment. Your budget should cover mortgage repayments, 10-20% of the property value for annual maintenance, insurance, letting agent fees if applicable, and allow for void periods, planning for at least one month without rent each year. Don’t forget to account for tax on rental profits to ensure your investment remains financially sustainable.

Understand your tax obligations

As a landlord, you may be liable for several types of tax. This includes income tax on your rental profits, capital gains tax when you sell a property, and the stamp duty surcharge payable to HMRC if you are purchasing additional properties.

Being aware of these obligations and planning for them in advance is essential to protect your investment and avoid unexpected financial surprises.

You can deduct allowance expenses from your rent, to calculate the tax due.

Allowable expenses include:

• Repairs and maintenance

• Letting agent fees

• Mortgage broker fees

• Insurance

• Accountancy fees

• Replacement of domestic items

• Some travel related to management

Consider landlord insurance

Having the right insurance is essential for protecting your rental property and your finances.

Key policies to consider include landlord buildings insurance, contents insurance if the property is furnished, rent guarantee insurance to cover missed payments, and public liability insurance. Choosing the appropriate cover can provide peace of mind and safeguard your investment.

Use budgeting tools

MoneySuperMarket offers helpful tools such as:

• Mortgage calculators - estimate repayments and compare buy-to-let mortgages

• Landlord insurance comparison tools - to find competitive insurance

• Household bills comparison tools - if you’re including utilities in rent

Other useful tools include:

• Rental yield calculators (various property investment sites)

• Expense tracking apps (e.g., landlord-specific apps)

• Digital bookkeeping tools (useful for tax reporting)

Set realistic rental expectations and understand yields

Before letting a property, it’s important to set realistic rental expectations and understand potential returns.

Gross yield is calculated by dividing the annual rent by the property value and multiplying by 100, while net yield accounts for costs by dividing annual profit after expenses by the property value and multiplying by 100.

Focusing on net yield provides a more accurate picture of the true financial return on your investment.

Research local market rent

Before setting your rent, it’s crucial to research the local market. Comparing similar properties in the area helps you avoid overpricing, which can lead to prolonged void periods, or underpricing, which reduces your potential profit. Understanding what tenants are willing to pay ensures your property remains competitive and profitable.

Avoid over-estimating capital growth

Property values can fluctuate over time, so it’s important not to rely solely on potential capital growth when assessing a buy-to-let investment. Instead, focus on generating sustainable rental income, which provides a steady return and helps ensure your investment remains financially viable even if property prices change.

How to avoid losing money on a buy-to-let

To protect your investment, carefully budget for all costs, including mortgage payments, maintenance, insurance, and void periods. Choose the right area and property type to ensure strong rental demand, and screen tenants thoroughly to minimise risks.

Stay compliant with legal requirements, maintain the property proactively to prevent costly repairs, and use tools or calculators to forecast yields and cash flow accurately. Taking these steps helps maximise returns and reduce financial risk.

Landlord insurance can protect you against various eventualities.

Legal responsibilities as a landlord

As a landlord, you have a range of legal obligations to protect your tenants and comply with regulations. You must ensure gas and electrical safety checks are up to date, install smoke and carbon monoxide alarms, meet minimum EPC rating requirements, and protect tenants’ deposits in a government-approved scheme.

You also need to carry out Right to Rent checks and provide all necessary tenancy paperwork, including a tenancy agreement and the How to Rent guide. Meeting these requirements is essential to avoid legal issues and fines which will eat into your profits.

Understanding the Renters’ Rights Act

The Renters’ Rights Act 2025 affects landlords in England. It has received Royal Assent and will take effect in 2026.

Here’s what you need to know about the act:

No more “no‑fault” evictions

The act abolishes eviction under Section 21 Housing Act 1988 - landlords can no longer evict tenants without giving a valid reason. Instead, to repossess a property landlords must use specific legal grounds (e.g. rent arrears, antisocial behaviour, sale or landlord needing the property).

All tenancies become periodic (rolling)

Fixed‑term assured shorthold tenancies (ASTs) will be abolished. All private rented sector tenancies will convert to periodic tenancies. This gives tenants greater security and flexibility.

Tenants will be able to end their tenancy with two months’ notice.

Rent increase rules tightened

Landlords will only be allowed to increase rent once per year - using a formal statutory notice (via Section 13 Housing Act 1988 procedure) with at least two months’ notice.

Tenants will also have the right to challenge above‑market or unfair proposed increases (via tribunal) where applicable.

Ban on ‘rental bidding wars’ and limits on rent up-front payment

Landlords and letting agents will no longer be allowed to accept or encourage offers above the advertised rent. The advertised rent must be honoured. In addition, landlords can request no more than one month’s rent in advance. Demanding higher upfront payments is prohibited.

No discrimination against tenants with children or on benefits

It will be illegal for landlords or letting agents to discriminate against prospective tenants on the basis of them having children or receiving benefits. This includes adverts, viewings, tenancy offers or contract terms.

Stricter property standards, hazard response, and greater enforcement

The act extends protections such as applying the equivalent of Awaab’s Law and a modernised ‘decent homes’ standard to the private rented sector - landlords will have legal duties to ensure properties are safe, damp‑free, and free from hazards.

Overdue or dangerous issues (mould, structural hazards, etc.) may need to be addressed within statutory timescales.

New enforcement and tenant support mechanisms

The legislation plans to introduce - in later phases - a mandatory private‑rented‑sector database for landlords and properties, and a new independent Landlord Ombudsman to handle disputes between landlords and tenants without the need for court.