Is buy-to-let still worth it in 2026? The honest maths

This one is for anyone sitting on the fence: landlords wondering whether to sell up, and new investors wondering whether the boat has sailed. We are going to weigh the genuine negatives against the genuine positives, then run the numbers on a real-world example. No hype either way.

The short answer

Buy-to-let in 2026 is a harder, more professional business than it was ten years ago. The lazy version of it (buy anything, let it wash its own face, ride the capital growth) is dead. But the maths still works if, and only if, you buy right. Here is the evidence for both sides.

The honest negatives

Section 21 is gone. The Renters' Rights Act 2025's tenancy reforms took effect on 1 May 2026. No-fault evictions are abolished, fixed terms are replaced by periodic tenancies, and possession now runs through Section 8 grounds (arrears, sale, moving in yourself). Old Section 21 notices are only enforceable if court proceedings were issued by 31 July 2026. You can still get your property back, but you need a legal reason and a paper trail. Our landlord compliance guide covers what good record-keeping looks like now.

EPC C is coming. In January 2026 the government confirmed its plan: private rented homes in England must reach EPC C (under a new metric system) by 1 October 2030, with a cost cap of £10,000 per property, up from the old £3,500. Spend the cap without hitting C and you can register a 10-year exemption. Homes valued under £100,000 get a lower spend cap of roughly 10% of the property's value. Proposed maximum fines run to £30,000 per property. The regulations still have to be laid before Parliament, so treat this as a confirmed plan rather than final law, but budget for it as if it is happening.

Section 24 still bites, and tax is going up. If you own in your personal name, mortgage interest is not deductible from rental profit. You get a 20% tax credit instead, which stings badly for higher-rate taxpayers. On top of that, the November 2025 Budget announced separate property income tax rates of 22%, 42% and 47% from 6 April 2027, two percentage points above normal income tax rates.

Stamp duty surcharge is 5%. Since 31 October 2024, buying an additional property means a 5% SDLT surcharge on the whole price, on top of standard rates. On a £110,000 house that is £5,500 gone on day one.

Licensing and registration keep spreading. Selective licensing schemes keep multiplying council by council, and the Renters' Rights Act adds a national landlord database and mandatory ombudsman membership, both with start dates still to be confirmed. Each is a cost and an admin job.

The honest positives

Northern yields are genuinely strong. Zoopla puts average gross yields at 7.9% in the North East, 6.8% in the North West and 6.5% in Yorkshire and the Humber, against a UK average of 5.8%. Specialist lender data for Q2 2026 is even punchier, with England and Wales averaging 7.8% and the North East above 9%. Cheap stock plus solid rents is the whole game.

Rents are at record levels. ONS data shows average UK private rent at £1,383 a month in the 12 months to May 2026, up 3.3% on the year (England £1,442, up 3.4%). Growth has been slowing since the record annual rise of 11.7% in August 2023, but the level is the highest on record.

Casual landlords are leaving. Around 15% of homes listed for sale in mid-2026 were previously rentals, and in London former rentals made up roughly 30% of new listings. That is bad news for tenants and supply, but for a buyer it means motivated sellers, negotiating room, and less competition from amateurs once you own.

The market is professionalising. Industry data shows average portfolio sizes growing and more landlords describing themselves as full time, while small-scale amateur landlords exit. The people staying in are the ones treating it as a business. If you are willing to do the same, you are competing against fewer, better opponents, which is fine, because the bar is knowable.

One honestly worked example

A terraced house in the North East or Yorkshire at £110,000, renting at £725 a month (£8,700 a year). Financed at 75% LTV interest-only, using the market average 5-year fixed rate at 75% LTV of about 5.2% (average of products with a £2,000 fee, market data as at 9 July 2026, an average, not a recommendation).

Now the tax, because this is where Section 24 changes the story. In a personal name, a basic-rate taxpayer pays roughly £347 tax on this deal (20% on the £6,051 profit, minus the 20% interest credit), leaving about £1,389 a year. A higher-rate taxpayer pays roughly £1,557, leaving about £179 a year. That is not a typo. For higher-rate taxpayers holding in a personal name, this deal barely breaks even, and the 2027 rate rise makes it worse. It is exactly why so many landlords now use limited companies, where interest is fully deductible. Get proper advice on structure before you buy, not after.

Run your own numbers on any deal with our yield calculator, and read how to work out yield properly first.

What "buying right" means in 2026

• Buy where gross yield clears 7%. At today's rates, a 5% gross yield in the south is a subsidy hobby, not an investment.
• Buy the EPC before you buy the house. A C-rated property, or a D priced with £5,000 to £10,000 of works deducted, is fine. An E-rated solid-wall terrace at full price is someone else's problem.
• Stress test at two points above your rate. If the deal dies at 7.2%, it was never alive.
• Hold three months of rent as a buffer. Possession through the courts is slower than a Section 21 ever was. Arrears cover is now a structural cost, not bad luck.
• Check licensing before you offer. A £750 selective licence changes the maths on a cheap terrace.
• Decide your structure first. Personal name versus limited company is now a bigger driver of returns than negotiating £3,000 off the price.

Mistakes people make

• Quoting gross yield and thinking it is profit. The gap between 7.9% gross and 4.8% cash-on-cash in the example above is the whole lesson.
• Ignoring Section 24 because "my accountant will sort it". Model your after-tax number before offering.
• Buying a cheap EPC E house with no budget for works, then discovering the cap is a spend requirement, not a get-out.
• Treating rent growth as guaranteed. ONS growth is slowing; underwrite today's rent, not next year's hope.
• Selling in a panic. Plenty of landlords exiting now are crystallising losses on properties that a bit of admin would have made compliant.

The process got harder. The maths, in the right postcodes, still works. Buy right or do not buy.

Sources: gov.uk, Guide to the Renters' Rights Act, gov.uk, Improving the energy performance of privately rented homes (government response), gov.uk, SDLT residential property rates, gov.uk, Tax relief changes for residential landlords, House of Commons Library, Budget 2025 income tax rates on property income, ONS, Private rent and house prices UK, June 2026, Zoopla, highest yielding areas for buy-to-let, Rightmove, average buy-to-let mortgage rates, Mortgage Solutions, rental yields Q2 2026

Education, not financial advice. For mortgage advice, speak to an FCA-authorised broker.