Is Buy to Let Still Worth It in 2026?

The headlines about buy to let have not been kind. Higher mortgage rates. Section 24 tax changes. The Renters' Rights Act. Stamp duty surcharges. It's felt like a sustained campaign to make life difficult for landlords " and in many ways, it has been.

Rental demand and achievable rents vary by location and property. Assess local evidence and costs before deciding whether a purchase makes sense.

Here's a more honest look at what's actually going on.

The numbers that matter

The single biggest change to buy to let profitability isn't tax, or regulation, or stamp duty. It's mortgage rates.

When the base rate was 0.1%, a landlord could borrow at around 2% and rent the property at a 5% yield, leaving a comfortable margin. At 5%+ mortgage rates, that same property needs to be generating significantly more rent to wash its face " and in many parts of the country, it simply doesn't.

This is why the London suburban landlord who bought in 2019 at 75% LTV is in a very different position to the landlord in Lancashire who did the same thing but with a larger deposit and lower purchase price. Yield matters much more than it used to.

Where buy to let still makes sense

Broadly, the areas where buy to let still works:

• Higher-yield locations " the North of England, parts of the Midlands, Scotland. For illustration, £150,000 with £750 monthly rent gives a 6% gross annual yield before costs, tax and void periods
• HMO properties " houses in multiple occupation generate significantly higher rents per square foot. More work to manage, but much better returns on the right property
• Limited company structures " many landlords are now buying through a limited company rather than personally, which sidesteps the Section 24 mortgage interest restriction. This doesn't work for everyone, but for higher-rate taxpayers adding new properties, it's often worth doing the sums
• Holiday lets can generate seasonal income, but the separate FHL tax regime was abolished in April 2025. Assess returns under ordinary property-business tax rules, with advice for your ownership structure

Where it no longer makes sense

Standard buy to let in a low-yield area with a 75% LTV mortgage at current rates often doesn't produce positive cash flow any more. The numbers simply don't add up without significant capital growth " which is not something you can bank on.

The tax picture

The Section 24 changes (which restrict mortgage interest relief for individual landlords) have materially affected higher-rate taxpayers. If you're a basic-rate taxpayer, the impact is much smaller. If you're paying 40% tax, the difference is substantial.

Limited company buy to let isn't a magic wand " there are costs to incorporating, and eventually when you extract the profits from the company you'll pay tax on those too. But for someone building a portfolio from scratch, starting with a limited company structure is often the right move.

This is a conversation worth having with both a broker and an accountant before you buy anything.

What the smart landlords are doing

The landlords we see doing well right now aren't over-leveraged. They have at least 25% equity in their properties. They focus on yield rather than capital growth. Many are converting properties to HMO or short-term let use. A remortgage review should compare available rates, fees and any early repayment charge against staying with the existing lender.

Buy to let isn't dead. It's just less forgiving of slack underwriting than it was five years ago.

The honest question to ask yourself

If you removed the mortgage entirely and owned the property outright " would the rental income represent a good return on the capital tied up? A positive unleveraged return is only a starting point. Borrowing costs, tax, repairs and void periods can change the outcome, and capital growth is not guaranteed.