Is Buy to Let Still Worth It?
I've put the argument against first, and I've not softened it. A worked example below shows a higher rate taxpayer losing £388 a year on a property that looks fine on paper.
Buy to let still works, but on a much narrower set of deals than it did ten years ago. The tax and regulatory changes have removed the margin from anything bought at full asking price on a mortgage by a higher rate taxpayer. What’s left works because of the entry price, not because the market carries you.
That’s the whole answer. Everything below is the working.
Bullseye Properties Ltd is a buyer-only sourcing business in South Yorkshire and North Nottinghamshire, so I have an obvious commercial interest in you deciding the answer is yes. That’s exactly why the case against goes first, and why I’ve made it as strong as I can.
The case against, made properly
Four things have changed, and each one takes a bite out of the same margin.
Section 21 is gone. The Renters’ Rights Act 2025 abolished section 21 no fault evictions for assured tenancies in England on 1 May 2026. All tenancies are now periodic. Fixed terms have gone. A tenant can leave on two months’ notice at any point. To get possession you need a ground under section 8, and the two most relevant to investors, selling the property (ground 1A) and moving in yourself (ground 1), each require four months’ notice and then bar you from re-letting or marketing the property for 12 months afterwards. The mandatory rent arrears ground needs three months’ arrears, or 13 weeks where rent is paid weekly or fortnightly. Source: GOV.UK guide to the Renters’ Rights Act and the implementation roadmap, both checked 25 August 2026.
What that means in practice is your exit is slower and less certain than it was. If you buy something you might want out of in three years, price in the possibility that getting it back takes six months rather than two.
EPC C is now a date, not an aspiration. The current minimum is EPC (Energy Performance Certificate) band E, and it has been since 1 April 2020, with a £3,500 including VAT cost cap for exemptions. That’s changing. The Government response published 21 January 2026 confirmed a single compliance date of 1 October 2030 for a new EPC C equivalent standard in the private rented sector, and raised the cost cap to £10,000 per property with a 10 year exemption validity. Properties scoring C or above on the Energy Efficiency Rating before 1 October 2029 are grandparented in until that certificate expires. Government’s own estimate of the average spend is £5,400 per property. Sources: MEES landlord guidance and the government response on privately rented homes, both checked 25 August 2026.
So a solid stone terrace at EPC D with no cavity to fill is not a £0 problem any more. It’s a number between £0 and £10,000 that lands before October 2030.
The finance cost restriction. Since 6 April 2020 individual landlords can’t deduct mortgage interest from rental income. Instead you get a basic rate tax reduction of 20% of the lower of your finance costs, your property profits, or your adjusted total income. The restriction applies to individuals receiving rental income on residential property. Companies are taxed under different rules, which is a conversation for an accountant rather than for me. Source: GOV.UK tax relief for residential landlords, checked 25 August 2026.
Stamp duty. From 1 April 2025 the higher rates for additional dwellings start at 5% on the first £125,000, 7% from £125,001 to £250,000, then 10%, 15% and 17% on the bands above. Non-UK residents pay a further 2% on top. Source: GOV.UK higher rates guidance, checked 25 August 2026. On a £115,000 property that’s £5,750 of tax on a purchase where a homeowner would pay nothing.
What that actually does to a normal deal
Here’s the arithmetic on a property that looks perfectly reasonable in a deal pack. £115,000 purchase, £650 a month rent, 25% deposit, interest only at 5.5%.
| Line | Amount |
|---|---|
| Gross rent (£650 x 12) | £7,800 |
| Management at 10% | £780 |
| Maintenance allowance at 10% | £780 |
| Insurance | £250 |
| Void allowance | £312 |
| Profit for tax purposes | £5,678 |
| Mortgage interest on £86,250 at 5.5% | £4,744 |
| Actual cash in your pocket, before tax | £934 |
Now apply tax. The taxable profit is £5,678, because the interest isn’t deductible.
A basic rate taxpayer owes 20% of £5,678, which is £1,136, less the finance cost reduction of 20% of £4,744, which is £949. Tax due £187. Net for the year: £747.
A higher rate taxpayer owes 40% of £5,678, which is £2,271, less the same £949. Tax due £1,322. Net for the year: minus £388.
That property loses a higher rate taxpayer money every year. It isn’t a bad house. The gross yield is 6.8%, which reads fine. The listing would say “great investment opportunity”. And if you’d asked the agent to model it, they wouldn’t have, because that isn’t their job. Estate agents work for the seller covers why that’s structural rather than personal.
So why does anyone still do it?
Because the entry price is the variable nobody in that model touched, and it’s the one that moves everything.
Run the same property at £95,000 instead of £115,000, which is 17% below, roughly where the properties I source come in. Deposit £23,750, mortgage £71,250, interest at 5.5% is £3,919. Same rent, same running costs, so the same £5,678 taxable profit. Cash before tax is £1,759. The higher rate taxpayer’s bill is £2,271 less 20% of £3,919, which is £784, so £1,487. Net for the year: £272.
That’s the difference between minus £388 and plus £272 on the identical house, from the purchase price alone. £20,000 of negotiation was worth £660 a year of net income and £20,000 of equity on day one.
Then add the second half of the return, which is capital growth, and the picture changes again. The £20,000 you didn’t pay is equity you own from completion. At 4% growth on a £115,000 valuation, the market takes about four years to hand you the same amount.
The four things that make it work now
- Buy below market value. Every property Bullseye Properties has sourced across South Yorkshire and North Nottinghamshire came in 10 to 20% below market value. The best was 23 Beech Grove at £90,000 against a £125,000 original asking price, 28% below.
- Buy at a price point where the yield can absorb the costs. The £80,000 to £140,000 bracket in this region produces 7 to 8% net ROI (Return on Investment) at the right entry price. A £400,000 property in the South East at 4% gross cannot survive the same cost model.
- Buy the right condition. Roof, damp, wiring and the EPC route to C are now financial questions with a 1 October 2030 deadline attached, not decorating questions.
- Know your own tax position before you buy, not after. The gap between the basic rate and higher rate outcomes above is £1,135 a year on the same house.
Is it better than just putting the money in an ISA?
Not always, and that’s a real test rather than a rhetorical one. If you put £50,000 in and net £1,000 a year, that’s 2%. A cash ISA does better than that with no leaking roof, no tenant, no void, and your money back on demand. That deal isn’t an investment, it’s an expensive hobby.
The reason property can beat it is leverage and growth working together. £45,000 of cash controlling a £115,000 asset captures the growth on the whole £115,000. At 4% a year that’s £4,600 of value in year one against £45,000 of cash, before any rent at all. No cash ISA does that. But it only holds if the property covers its own costs while you wait, which brings you back to the entry price.
What about interest rates?
Stress test at the rate you’re offered plus 1.5 to 2%, and see whether the deal still stands up. On the £115,000 example, moving from 5.5% to 7% takes the interest from £4,744 to £6,038, which turns £934 of pre-tax cash into minus £360.
That’s not a prediction about rates. It’s a test of whether the margin is real or whether it’s just the current rate flattering the deal. If it only works at today’s rate, the margin isn’t there.
Who should probably not do this
Someone who needs the money back inside three years. Selling costs you agent fees, legals and possibly Capital Gains Tax, and with section 21 gone, getting vacant possession to sell takes four months’ notice on ground 1A plus whatever the court takes if the tenant doesn’t leave.
Someone who couldn’t absorb a three month void and a £4,000 repair in the same year without it becoming a problem. That’s a normal year in a portfolio and a crisis in a single property bought too tightly.
Someone who wants it to be passive from day one. It becomes fairly passive once it’s let and managed. Getting there isn’t.
What I would do next
Take whatever deal you’re looking at and run the model above on it with your own tax rate. Not the gross yield. The line that says “net for the year, after tax”. If that number is under £1,000 on a £40,000 cash investment, walk away and don’t feel clever about it.
Then check the EPC. If it’s a D or worse with solid walls, get a real number for the route to C before you commit, because 1 October 2030 is a fixed date and £10,000 is the cap on what you can be made to spend.
If you want that model built on a specific property, send me the listing. I’ll do the full cost breakdown including the tax position and tell you honestly if it doesn’t work. What it costs explains the fee, which is fixed and agreed in writing before anything starts, and the four case studies show the real purchase prices and rents rather than the illustrative ones.
Connor, Bullseye Properties Ltd