Is Buy-to-Let Still Worth It in 2026? The Honest Numbers

Rents are still rising, but so are mortgage costs and tax. Here are the latest numbers, a worked example, and who it still works for.

Updated 10 October 2026

The short answer

It can still work, but less often than it used to. With mortgage rates near 6% and higher property tax from April 2027, a heavily borrowed flat owned by a higher-rate taxpayer often costs money each month and relies on house prices rising. Buy-to-let works better for buyers with bigger deposits, in higher-yield areas, through a company, or for basic-rate taxpayers.

Where the market is, October 2026

Measure	Latest
Average UK rent	£1,400 a month, up 3.8% in a year (ONS, August 2026)
Average London rent	£2,332 a month, up 3.5%
Average gross yield	7.0% across Paragon's landlords; London lowest at 5.6%, the North East and Scotland near 8% (Q2 2026)
Average fixed buy-to-let mortgage rate	About 5.8% (early October 2026)
Bank of England base rate	3.75%, held in September with 3 of 9 votes for a rise; next decision 5 November
House prices	UK up 1.4% in a year, London down 3.3% (July 2026)
Stamp duty surcharge	5% on top of normal rates for additional homes (England and Northern Ireland; Scotland and Wales have their own rates)

Rents for new lets are rising more slowly than the ONS average, at about 2% to 3% a year, because the ONS figure includes existing tenancies.

Worked example: a £250,000 purchase

A £250,000 house let for £1,250 a month (a 6% gross yield), bought with a 75% interest-only mortgage at 5.5%, with running costs of 20% of the rent. Figures are for 2027/28, when the new property tax rates apply.

	Higher-rate, own name	Basic-rate, own name
Rent a year	£15,000	£15,000
Running costs	−£3,000	−£3,000
Mortgage interest (£187,500 at 5.5%)	−£10,313	−£10,313
Tax after the 22% interest credit	−£2,771	−£371
Cash left a year	−£1,084	£1,316

The cash to buy is about £80,500: a £62,500 deposit, £15,000 of stamp duty with the surcharge, and roughly £3,000 of fees. On those figures, the return comes almost entirely from house prices. At 3% growth a year, the house gains about £7,500 a year in value. With no growth, the higher-rate landlord is simply paying to own it.

Who it still works for

Bigger deposits or cash buyers. Less borrowing means less exposure to rates, and Section 24 bites less.
Higher-yield areas. The North, Scotland and Wales often yield 7% to 9%, against 5% to 6% in London and the South East.
Company buyers. A company deducts mortgage interest in full. It suits higher-rate taxpayers who can leave profit in the business. See our limited company guide.
Long-term owners. Supply is falling as some landlords sell, which supports rents.

Who should think twice

Higher-rate taxpayers borrowing 75% in their own name, especially in London.
Anyone whose plan only works if rates fall quickly.
Landlords without a cash buffer for empty months, repairs and the extra rules.

What's coming that affects the numbers

April 2027: rental profit taxed at 22%, 42% and 47%. See our April 2027 guide.
From December 2026: the landlord database, at £65 per property per year.
2028: joining the new landlord ombudsman becomes compulsory.
October 2030: rentals must reach EPC C, with a £10,000 cost cap per property.

Before you buy, run the numbers

Check the yield, the stamp duty, what you'd keep after Section 24, and whether a company would be better. Then test what a rate rise would do to it.

Questions landlords ask

What is a good rental yield in 2026?

Gross yields averaged about 7% across Paragon's landlords in mid-2026, but that includes higher-yield HMOs and northern properties. Around 6% or more is often needed for a mortgaged buy-to-let to cover costs at today's rates, and London averages under 6%.

Is it better to buy a rental through a limited company?

For higher-rate taxpayers buying new property with a mortgage, a company is often better because it can deduct all its mortgage interest. Company mortgages cost a little more, and taking money out is taxed as dividends. Our limited company calculator compares the two.

Will buy-to-let mortgage rates come down?

Nobody knows. In September 2026 the Bank of England held the base rate at 3.75%, but three of its nine members voted for a rise, and fixed rates rose in early October. Plan on today's rates rather than hoping for cuts.

How much deposit do I need for a buy-to-let?

Usually at least 25% of the price, plus stamp duty with the 5% surcharge and buying fees. On a £250,000 purchase that's around £80,000 in total.

Is buy-to-let still worth it in 2026?