Is buy-to-let still worth it, and how much do landlords actually make?

In England, buy-to-let in 2026 is no longer a simple rent-minus-mortgage bet; the answer depends on tax position, finance structure, jurisdiction and whether the landlord is buying for income, capital growth or both. Across the UK, the market is still profitable for many landlords, but higher tax, mortgage costs and regulation have made weak-yield purchases much easier to get wrong.

Is buy-to-let still worth it?

Buy-to-let is still worth it in the UK in 2026 only where the deal works after higher purchase tax, finance-cost restriction, voids, repairs and regulation, because the old model of relying on cheap debt and rising prices has largely gone. For individual landlords, the key tax drag is that, from 2020–21, “no deduction is allowed for costs of a dwelling-related loan,” and HMRC says “Income Tax relief on all residential property finance costs is restricted to the basic rate of Income Tax.” That does not mean buy-to-let is not worth it: Hamptons calculated an 8.6% average annual total return for a typical landlord selling in 2024 after 10 years, and Pegasus reported that 85% of NRLA-member landlords still described their lettings as profitable. The honest answer is that being a landlord is still profitable for good assets bought at the right price, but buy-to-let is not worth it when the margin only survives before tax, maintenance and vacancies.

How much profit do landlords actually make?

UK landlords do not all make the same profit: HMRC’s latest official figure is £19,400 average declared property income for unincorporated Self Assessment landlords in 2023–24, while Pegasus reported £89,000 average annual rental income for NRLA members in Q1 2026, and those are different populations and different measures. HMRC’s figure is an official declared-property-income statistic, not a promise that a landlord will make £19,400 per house or per year; Pegasus’s £89,000 is rental income, not net profit after mortgages, repairs, tax and voids. HMRC gives the basic calculation: “Your profit is the amount left once you’ve added together your rental income and taken away the expenses or allowances you can claim.” The lower end matters too: HMRC/Ipsos found that “half (52%) earn less than £10,000 of profit annually.” A buy-to-let profit calculator should therefore start with rent, deduct real running costs and tax, and only then divide by month or property. Abodient tracks rent, expenses and finance at property level, which is the record a landlord needs before working out real profit rather than headline rent.

Can you lose money on a rental property?

Yes, you can lose money on a rental property, and HMRC states the test bluntly: “If the allowable expenses are more than your rental income you will make a loss.” That can happen even when the rent looks strong, because mortgage interest, service charges, repairs, licensing, insurance, letting fees, arrears and empty periods can overwhelm the income. A tax loss is not automatically useful against salary either: HMRC’s Property Income Manual says “any rental business loss is automatically carried forward and set off against rental business profits of the following year,” and HMRC guidance adds that when the rental business ends, “any losses that have been carried forward are usually lost as they cannot be set against any other income.” A separate capital loss on sale can reduce taxable gains, because HMRC says “You can report losses on a chargeable asset to HM Revenue and Customs (HMRC) to reduce your total taxable gains.” Losing money is normal enough to model, but not normal enough to ignore.

Is buy-to-let still worth it for a higher-rate taxpayer?

From 2027–28, property income gets its own tax rates — 22% basic, 42% higher, above the ordinary 20%/40% bands — under Finance Act 2026, England/Wales/NI only. Finance Act 2026 states that “the property basic rate is 22%” and “the property higher rate is 42%,” with the change applying from “the tax year 2027-28 and subsequent tax years”; Treasury guidance says “This will apply to England, Wales and Northern Ireland.” Higher-rate taxpayers are hit hardest because individual residential landlords cannot deduct mortgage interest from rental profits: the statute says “no deduction is allowed for costs of a dwelling-related loan.” That can make a profitable-looking property cash-negative after tax, especially at high loan-to-value. Companies remain different: HMRC says “Companies are not subject to the finance cost restriction rules.” For a higher-rate taxpayer, buy-to-let is still worth it only when the post-tax cashflow and exit plan work under the higher property-income rates, not just under today’s rent.

Is buy-to-let worth it in Scotland?

Buy-to-let in Scotland can still be worth it, but it has a distinct tax-and-rent-control profile: Scottish income-tax bands apply to property income, the Additional Dwelling Supplement is 8%, and private residential tenancy rent can rise only once in 12 months. Revenue Scotland states: “For transactions on or after 5 December 2024 the ADS is 8% of the purchase price.” Scottish rental income is non-savings, non-dividend income, and HMRC’s Scottish income-tax statistics say “NSND income includes earnings from employment, pensions, profits from self-employed sources and property.” Rent increases are structurally more limited than many English landlords expect: the Private Housing (Tenancies) (Scotland) Act 2016 says “The rent payable under a private residential tenancy may not be increased more than once in a 12 month period.” The old emergency rent cap has ended — the Scottish Government says it “no longer apply from 1 April 2024” — but rent-control areas are now legislated for, so Scotland is a yield market that rewards careful local pricing rather than loose rent-growth assumptions.

Is buy-to-let a better place for your money than cash or shares?

Buy-to-let is not automatically a better place for your money than cash or shares; it offers leverage and rental income, but cash and ISAs offer simplicity, liquidity and tax shelter that property cannot match. In 2026–27, the ISA allowance remains large enough to matter for an investor comparing a £160k savings pot with deposits across several flats: GOV.UK says “the maximum you can save in ISAs is £20,000,” and dividends inside the wrapper are sheltered because “You do not pay tax on dividends from shares in an ISA.” Cash returns are lower but cleaner: the Bank of England held Bank Rate at 3.75% in July 2026, while Moneyfacts reported an average easy-access savings rate of 2.53%. Property may beat that through leverage, rent and capital growth, but it adds debt risk, repairs, tax filings and tenant risk. For someone with no landlord experience, buy-to-let is only the better move if the net yield after stress-testing beats the easy, diversified alternative by enough to pay for the hassle.

Why are landlords selling up?

Despite rising sell-intent surveys, landlord purchases overtook sales for the first time since 2019, though 24% still sold in the past year against 5% who bought. Hamptons’ Great Britain data says “for the first time since 2019, the share of homes bought by landlords exceeded the share of homes sold by them,” while the NRLA poll said “almost a quarter (24 per cent) said they had sold property over the previous 12 months, compared with just 5 per cent who said they had purchased.” The selling pressure is real, but not a one-way exodus. In England, the Renters’ Rights Act reforms abolished section 21 evictions from 1 May 2026 for private assured tenancies, while Wales still keeps a six-month no-fault route: Welsh law says the date in a section 173 notice “may not be less than six months after the day on which the notice is given.” Landlords are selling because tax, mortgage rates and regulation have narrowed the margin, not because the market has ended.

Why is being a landlord so stressful?

Being a landlord is stressful because the job combines investment risk, tax exposure, legal deadlines, tenant welfare, repairs and political change in one asset that is expensive to sell quickly. The English Private Landlord Survey captures the pressure: landlords most often cited “forthcoming legislative changes such as changes to the means of evicting tenants, and recent tax changes such as changes to mortgage interest relief and Capital Gains Tax,” with concern at 64% and 59% respectively. Some duties are routine but unforgiving; for gas safety in England, Wales and Scotland, the regulations require each relevant appliance and flue to be checked “at intervals of not more than 12 months since it was last checked for safety.” The stress is not just paperwork. A landlord can be profitable on paper while dealing with a boiler failure, arrears, a possession timetable, a licensing renewal and a tax bill in the same month. Abodient helps here by tracking compliance obligations, certificates and expiries against each property, so the avoidable stress is visible before it becomes overdue.

Why are landlords switching to short-term lets?

English holiday-let enquiries are up 88%, but actual supply is down 15%, so landlords are interested in short-term lets without the sector simply booming after the furnished-holiday-let tax repeal. Cumberland/Pegasus reported that “88% of brokers interviewed reported an increase in holiday let enquiries over the past 12 months,” while Hamptons found that “the number of holiday lets paying business rates has fallen by 15% in England in the year to April 2025.” The attraction is clear: a genuine holiday letting is outside ordinary assured-tenancy status, because Housing Act 1988 Schedule 1 covers “A tenancy the purpose of which is to confer on the tenant the right to occupy the dwelling-house for a holiday.” The tax advantage is weaker than it was: HMRC says the furnished-holiday-lettings rules cease from 6 April 2025 for Income Tax and CGT and from 1 April 2025 for Corporation Tax. Licensing also differs by nation: Scotland already requires licensing, Wales’ default start is March 2030, and Northern Ireland requires a Tourism NI certificate.

What do landlords on Reddit say about buy-to-let?

Landlords and investors on Reddit tend to describe buy-to-let as possible but hard work, with the UKPersonalFinance wiki saying the community recognises “there are far easier ways to make money.” That Reddit view is not law, but it reflects the current arithmetic: individual landlords face the finance-cost restriction, while companies do not; HMRC says “Companies carrying on property business are not affected.” The Reddit-style argument is strongest for higher-rate taxpayers, because the same property can look fine before tax and poor after tax. UKPersonalFinance’s own worked-example summary says that, with the same expenses and income, “this property could be either profitable or unprofitable” depending on whether the owner is a higher-rate or basic-rate taxpayer. Reddit is useful for seeing the lived version of buy-to-let not worth it: landlords complain less about a single rule than about leverage, tenant risk, repair bills, tax drag and the opportunity cost of not simply buying funds in an ISA or pension.

Will the UK property market crash in 2026?

A UK property market crash in 2026 is not the central forecast: the OBR projected house-price inflation averaging just over 2½%, Nationwide expected 2–4% growth, and ONS recorded UK prices up 2.0% in the year to June 2026. The OBR says “we project house price inflation to average just over 2½ per cent over the forecast period,” while Nationwide said “annual house price growth” would remain “in the 2 to 4% range next year.” The outturn is uneven, not a single national crash: ONS reported that “Average UK house prices increased by 2.0%, to £272,000,” but also that London prices “fell by 2.5%” and Northern Ireland prices were “up by 9.2%.” The Bank of England still flagged weak activity, saying mortgage approvals fell by nearly 15% in May. The best answer is therefore no national crash forecast, but a market where weak local areas can fall while others keep rising.

Last reviewed September 2026.

Sources

• Income Tax (Trading and Other Income) Act 2005 s.272A — “In calculating the profits of a property business for income tax purposes for the tax year 2020-21 or any subsequent tax year, no deduction is allowed for costs of a dwelling-related loan.” Source
• GOV.UK, Income Tax when you rent out a property — “From 6 April 2020 Income Tax relief on all residential property finance costs is restricted to the basic rate of Income Tax.” Source
• GOV.UK, Income Tax when you rent out a property — “Your profit is the amount left once you’ve added together your rental income and taken away the expenses or allowances you can claim.” Source
• GOV.UK, Income Tax when you rent out a property — “If the allowable expenses are more than your rental income you will make a loss.” Source
• GOV.UK, Income Tax when you rent out a property — “When your rental business ends, any losses that have been carried forward are usually lost as they cannot be set against any other income.” Source
• HMRC Property Income Manual PIM4210 — “The general rule is that any rental business loss is automatically carried forward and set off against rental business profits of the following year (ITA07/S118 and S119).” Source
• GOV.UK, Capital Gains Tax losses — “You can report losses on a chargeable asset to HM Revenue and Customs (HMRC) to reduce your total taxable gains.” Source
• GOV.UK Property Rental Income Statistics 2024 — “average property income declared by unincorporated landlords increased in 2023 to 2024, to £19,400, the highest average in the last 5 years, compared with £18,300 in 2022 to 2023” Source
• Pegasus Insight, Landlord incomes hit record £89,000 — “The latest Landlord Trends research from Pegasus Insight reveals that average annual rental income has reached a record £89,000, up £14,000 in the last quarter alone and £16,000 higher than a year ago.” Source
• GOV.UK, Landlords research executive summary — “Almost two-thirds of landlords (63%) reported they earned less than £20,000 of annual gross rental income from their properties and half (52%) earn less than £10,000 of profit annually.” Source
• Hamptons, Market Insight Spring 2025 — “This means that they enjoyed an average annual total return of 8.6%, taking into account rental income and capital growth, whilst deducting allowances for maintenance expenses.” Source
• MoneyAge, 85% of landlords report profitable activity in Q4 — “The vast majority of landlords (85%) are continuing to report their lettings activity as profitable, new research by Pegasus Insight has highlighted.” Source
• Finance Act 2026 s.7 — “(a)the property basic rate is 22%,” Source
• Finance Act 2026 s.7 — “(b)the property higher rate is 42%, and” Source
• Finance Act 2026 s.6 — “The amendments made by this section and that Schedule have effect for the tax year 2027-28 and subsequent tax years.” Source
• HM Treasury, Income Tax changes to tax rates for property, savings and dividend income — “This will apply to England, Wales and Northern Ireland.” Source
• HMRC Property Income Manual PIM2054 — “Companies carrying on property business are not affected.” Source
• Revenue Scotland, Additional Dwelling Supplement — “For transactions on or after 5 December 2024 the ADS is 8% of the purchase price.” Source
• GOV.UK, Scottish Income Tax outturn statistics 2024 to 2025 — “NSND income includes earnings from employment, pensions, profits from self-employed sources and property.” Source
• Private Housing (Tenancies) (Scotland) Act 2016 s.19 — “The rent payable under a private residential tenancy may not be increased more than once in a 12 month period.” Source
• Scottish Government, Cost of living rent and eviction changes — “The temporary rent cap and evictions protections brought in by the Cost of Living (Tenant Protection) Act 2022 no longer apply from 1 April 2024.” Source
• GOV.UK, Individual Savings Accounts — “In the 2026 to 2027 tax year, the maximum you can save in ISAs is £20,000” Source
• GOV.UK, Tax on dividends — “You do not pay tax on dividends from shares in an ISA.” Source
• Bank of England, Bank Rate — “Today, we’ve held Bank Rate at 3.75%.” Source
• Moneyfacts, Savers risk missing out as competition thrives — “The typical easy access savings rate, for instance, rose from 2.48% to 2.53% month-on-month (its highest in almost a year), while the average notice savings rate increased from 3.36% to 3.40% over the same timeframe.” Source
• Hamptons, Landlord sales slow following the Renters’ Rights Act — “This means that, for the first time since 2019, the share of homes bought by landlords exceeded the share of homes sold by them.” Source
• NRLA, Chancellor’s rental tax hike set to push up rents — “In spite of this, almost a quarter (24 per cent) said they had sold property over the previous 12 months, compared with just 5 per cent who said they had purchased properties during the same period.” Source
• Renting Homes (Wales) Act 2016 s.174 — “The date specified in a notice under section 173 may not be less than six months after the day on which the notice is given to the contract-holder.” Source
• English Private Landlord Survey 2024 — “Landlords most commonly mentioned forthcoming legislative changes such as changes to the means of evicting tenants, and recent tax changes such as changes to mortgage interest relief and Capital Gains Tax, with around six in ten landlords indicating concern (64% and 59%, respectively).” Source
• Gas Safety (Installation and Use) Regulations 1998 reg.36 — “ensure that each appliance and flue to which that duty extends is checked for safety within 12 months of being installed and at intervals of not more than 12 months since it was last checked for safety” Source
• Cumberland Holiday Let Index June 2026 — “According to the research, 88% of brokers interviewed reported an increase in holiday let enquiries over the past 12 months.” Source
• Hamptons, The impact of tax changes in 2025 — “In fact our analysis reveals that the number of holiday lets paying business rates has fallen by 15% in England in the year to April 2025.” Source
• Housing Act 1988 Schedule 1, holiday lettings — “A tenancy the purpose of which is to confer on the tenant the right to occupy the dwelling-house for a holiday.” Source
• HMRC Property Income Manual PIM4165 — “The furnished holiday lettings rules cease to apply in tax years commencing on or after 6 April 2025 for Income Tax and for Capital Gains Tax, and 1 April 2025 for Corporation Tax and for Corporation Tax on chargeable gains.” Source
• UKPersonalFinance, Buy-to-let — “UKPF does not hate buy-to-let however there is recognition in the community that there are far easier ways to make money.” Source
• UKPersonalFinance, Buy-to-let — “With expenses and income being equal, depending on if you are a higher rate or basic rate income taxpayer, this property could be either profitable or unprofitable.” Source
• OBR, Housing market forecast — “In our March 2026 EFO, we project house price inflation to average just over 2½ per cent over the forecast period, broadly in line with growth in average incomes.” Source
• Nationwide, 2025 review and 2026 outlook — “We expect annual house price growth to remain broadly in the 2 to 4% range next year.” Source
• ONS, Private rent and house prices UK August 2026 — “Average UK house prices increased by 2.0%, to £272,000, in the 12 months to June 2026 (provisional estimate); this annual growth rate is down from 3.0% in the 12 months to May 2026.” Source
• ONS, Private rent and house prices UK August 2026 — “Average prices fell by 2.5% in the 12 months to June 2026, up from an annual fall of 3.1% in the 12 months to May 2026.” Source
• ONS, Private rent and house prices UK August 2026 — “The average house price for Northern Ireland was £202,000 in Quarter 2 (Apr to June) 2026, up by 9.2% (£17,000) from Quarter 2 2025.” Source
• Bank of England, Monetary Policy Report July 2026 — “Housing market activity has been weak, however, and mortgage approvals for house purchase fell by nearly 15% in May, the largest monthly decline since late-2022, and were broadly flat in June.” Source