What is a let-to-buy remortgage and how does it differ from buy-to-let?

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Let-to-buy is essentially the reverse sequence of a standard buy-to-let purchase -- rather than buying a new property specifically to rent out, you convert a home you already live in into a rental property, then buy a new residential home to live in yourself. **Typical scenario** A common reason for let-to-buy is relocating for work, moving in with a partner, or simply wanting to move home while keeping the original property as an investment rather than selling it -- perhaps because the area is expected to grow in value, the mortgage rate is particularly good, or the owner wants a source of rental income rather than losing the property from their portfolio entirely. **The remortgage process** The homeowner typically remortgages their current residential mortgage onto a buy-to-let mortgage product (or a specific let-to-buy product some lenders offer), which usually allows them to release some equity in the process, since buy-to-let mortgages are often available at a similar or sometimes even higher loan-to-value than some residential deals, depending on the lender and rental income the property could achieve. This released equity, combined with any savings, can then be used as a deposit for the new residential property they intend to buy and live in. **Rental income and stress testing** As with any buy-to-let mortgage, the lender assesses whether the expected rental income the property could achieve is sufficient to comfortably cover the buy-to-let mortgage payments, typically requiring rental income to be a set percentage (commonly around 125%-145%, varying by lender and whether the applicant is a higher-rate taxpayer) of the mortgage interest payment at a stressed interest rate, not just the actual rate being offered. **Tax implications** Once let out, the property's rental income becomes taxable, and mortgage interest on the buy-to-let element is only available as a 20% tax credit (not a full deduction against rental income) under the Section 24 rules that apply to individual landlords, which can be a significant tax change for someone used to their previous mortgage interest simply being a private, non-taxable cost on their own home. **Stamp Duty on the new residential purchase** Buying a new residential property while retaining the old one as a rental typically means the new purchase is treated as an ADDITIONAL property for Stamp Duty Land Tax purposes, triggering the higher-rate SDLT surcharge (currently 5% on top of standard rates) -- unless the previous home is sold at the same time as, or shortly after, buying the new one, in some cases allowing a refund of the surcharge if certain conditions and time limits are met. **Worked example** A homeowner with £150,000 remaining on their residential mortgage on a home worth £280,000 wants to relocate. They remortgage the existing property onto a buy-to-let basis at 75% loan-to-value (£210,000), releasing £60,000 of equity after repaying the original £150,000 mortgage. They use this £60,000, plus savings, as a deposit on a new residential property elsewhere, while renting out the original home -- but they should budget for the SDLT surcharge on the new purchase (since they still own the first property at the point of buying the second) and for Section 24 tax treatment of the rental income going forward. **Practical tip** Take specialist mortgage and tax advice before pursuing let-to-buy, since the combination of buy-to-let lending criteria, Section 24 tax rules, and potential SDLT surcharges makes this meaningfully more complex than either a standard home move or a standard buy-to-let purchase alone.

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