Residential property is the most common form of buy to let and the most popular amongst investors. This can be attributed to reasonable and stable returns on investment, minimal risks, and the fact that (with finance available) you can leverage your investment using buy to let mortgages.
Residential buy to let investments are ready-made and completed properties; typically houses or apartments. This could be your average one bedroom apartment or three bedroom semi-detached home. Ideally, they will be purchased in desirable locations with the intention of renting them out to private tenants, who will usually sign renewable 12 month tenancy contracts. These properties will usually be purchased and sold at market value only.
A buy-to-let mortgage allows you to borrow money to purchase a property that you can then rent out. Buy-to-let mortgages are offered by a number of banks and building societies, traditionally being more expensive than a standard residential mortgage because they are considered a higher risk. If you have a residential mortgage and you rent out your property without the bank’s knowledge, you could find yourself committing mortgage fraud.