Buying your first rental property is not just about saving a deposit. In Scotland, landlords also need to plan for LBTT, possible Additional Dwelling Supplement (ADS), legal costs, mortgage fees and the money needed to get the property ready for tenants.

For most buyers, a 25% buy-to-let deposit is the usual starting point. For an HMO, lenders often expect between 25% and 40%. But the deposit is only one part of the real budget.

For example, on a £250,000 investment property in Edinburgh, a 25% deposit is £62,500. Once LBTT and the 8% ADS are included where ADS applies the cash needed before legal fees or property works can be £84,600.

That is why landlords should set a savings target based on the full cost of buying and launching the rental property, not only the mortgage deposit.

What deposit do you need for a buy-to-let in Scotland?

Most buy-to-let mortgage lenders ask for at least a 25% deposit. Some products may be available with a 20% deposit, but these can come with fewer lender options, higher rates or stricter affordability checks.

A larger deposit can improve your options:

Deposit level	What it may mean
20%	Possible with some lenders, but less choice
25%	Common starting point for buy-to-let mortgages
30% to 35%	More mortgage options and potentially better rates
40%	Lower loan-to-value and often stronger lending terms

Buy-to-let lenders do not only look at your deposit. They also assess whether the expected rent is high enough to cover the mortgage under their affordability calculations.

Before viewing properties, speak to a specialist buy-to-let mortgage broker. They can explain how much you may be able to borrow and what deposit level is realistic for your circumstances.

Is an HMO deposit higher than a normal buy-to-let deposit?

It can be.

An HMO mortgage is a specialist product because the property is rented to several tenants, usually with shared facilities. In Edinburgh, a property let to three or more unrelated people who share facilities normally needs an HMO licence.

Many HMO lenders require a 25% to 40% deposit. The exact amount can depend on:

• Your landlord or HMO experience
• The expected rental income
• The number of tenants and bedrooms
• Whether the property already has an HMO licence
• The condition of the property
• Your credit profile and wider finances

A property that is already a compliant HMO can be simpler to finance than a standard flat that needs conversion, fire-safety works or licensing approval.

The real cost of a £250,000 buy-to-let property in Edinburgh

A £250,000 property does not mean you only need £62,500 in savings.

Here is an example for a landlord using a 25% deposit.

Cost	Amount
Property purchase price	£250,000
Buy-to-let deposit at 25%	£62,500
Standard LBTT	£2,100
Additional Dwelling Supplement at 8%*	£20,000
Minimum cash needed before other costs	£84,600

ADS may apply when you buy an additional residential property. Your solicitor should confirm whether it applies to your specific purchase.

This example does not include solicitor fees, mortgage arrangement fees, valuations, surveys, repairs, furnishings, insurance or compliance costs. In reality, a landlord may want a target closer to £90,000 or more before purchasing a £250,000 investment property.

Why LBTT and ADS matter to Edinburgh landlords

Scotland does not use Stamp Duty. Instead, buyers may need to pay Land and Buildings Transaction Tax (LBTT).

Landlords buying an additional residential property may also need to pay the Additional Dwelling Supplement, currently 8% of the full purchase price for qualifying purchases.

On a £250,000 property:

• Standard LBTT is £2,100.
• ADS, if applicable, is £20,000.
• Total property tax is £22,100.

This is often the biggest surprise for first-time property investors. It is also why the cheapest property is not always the best investment. A lower purchase price reduces the deposit and ADS bill, but the rent, condition, tenant demand and running costs must still make financial sense.

Do you need cash beyond the deposit and tax?

Yes. A good landlord does not use every pound of savings to complete the purchase.

You should keep money aside for the practical costs of becoming a landlord, including:

• Solicitor and conveyancing fees
• Mortgage broker, arrangement and valuation fees
• Survey costs
• Landlord insurance
• Repairs, decorating and furnishing
• Gas safety, EICR and EPC requirements
• Smoke and heat alarms
• Landlord registration
• Letting-agent fees
• Void periods between tenancies
• Unexpected maintenance

For an HMO, also allow for licence fees, fire-safety measures, emergency lighting, PAT testing, fire-alarm requirements and any upgrades needed to meet Edinburgh’s standards.

Use our Landlords’ Initial Costs Calculator to build a clearer budget before you start making offers.

How much should you save each month?

Once you know your total target, turn it into a monthly plan.

If your goal is £84,600 and you have already saved £20,000, you need another £64,600.

Savings period	Monthly amount needed
3 years / 36 months	£1,795
4 years / 48 months	£1,346
5 years / 60 months	£1,077

The right timeline depends on your income, current savings and the type of property you want to buy. It may be better to save for longer and retain a cash reserve than buy quickly with no money left for repairs or void periods.

Can you buy a buy-to-let with a 20% deposit?

Sometimes, yes. A small number of lenders may consider a 20% buy-to-let deposit, but 25% is more common.

A 20% deposit means borrowing more, which can make mortgage affordability harder and may reduce your lender choice. If you are considering an HMO, a 20% deposit is less common because HMO lending is more specialist.

For most new landlords, planning around a 25% deposit is more realistic. If you can save 30% or more, you may benefit from stronger mortgage options and a larger safety buffer.

How can you reach your landlord deposit target sooner?

Start by separating your property savings from everyday spending. Set up an automatic transfer on payday and treat it like a fixed bill.

You may also be able to improve your position by:

• Reviewing subscriptions, travel, eating out and other regular spending
• Using a savings account or ISA that suits your circumstances
• Building savings through bonuses, commissions or freelance income
• Considering a lower-priced area or property type
• Buying with a partner, where suitable
• Using equity from an existing property, after independent mortgage advice

Do not stretch your budget simply to buy sooner. The strongest property investors keep enough cash available to deal with repairs, empty periods and unexpected costs.

Is an HMO a good investment in Edinburgh?

An HMO can provide higher rental income than a standard buy-to-let, but it also involves more responsibility, regulation and up-front cost.

Before buying, check:

• Whether the property can be licensed as an HMO
• Current and expected rental demand in the area
• The property’s condition and safety requirements
• Licence, conversion and compliance costs
• Mortgage availability
• Your realistic cash reserve after completion

Read our guide on where to invest in an HMO in Edinburgh and use our HMO Cost Calculator for Scotland before making a decision.

The most important number is not the deposit

For a buy-to-let or HMO in Edinburgh, the deposit gets your mortgage application started—but it does not make the investment ready.

Your real target should include the deposit, LBTT, any ADS due, professional fees, compliance costs and a cash reserve. Planning for the full figure gives you a better chance of buying confidently and avoiding financial pressure after completion.