Let's explore whether, in 2026, a buy-to-let property investment is still worth it.
With new legislation and regulations to contend with, the nature of buy-to-let is becoming more complex. But that's not to say it's not worth your while.
What are the main benefits of buy-to-let?
Buy-to-let remains a popular investment strategy for many in the UK, and several benefits continue to make it an attractive option for property investors.
With the ongoing shortage of affordable homes to buy, demand for rental properties is expected to remain stable in 2026. This means landlords are likely to experience fewer void periods and a consistent stream of tenants seeking quality accommodation.
The average gross yield across the UK for buy-to-let investment stands at 7.2%, which is the annual return of your investment property expressed as the percentage of its value.
So, 2026 is slightly up from the 7% seen across 2025 and well above the pre-pandemic level of 5.8% in 2019.* Underlining the positive continued growth being seen in buy-to-let investment properties.
Here's a closer look at why buy-to-let could be a smart move this year:
- Steady rental demand: With the ongoing shortage of affordable homes to buy, demand for rental properties is expected to remain stable in 2026. This means landlords are likely to experience fewer void periods and a consistent stream of tenants seeking quality accommodation.
- Potential for capital growth: While property prices can fluctuate, the long-term trend in the UK has been upward. Investors who purchase in areas with good growth prospects may benefit from an increase in property value over time, adding to their overall return.
- Regular income stream: Rental payments provide a monthly income, which can be especially appealing for those looking to supplement their salary or retirement funds. This predictable cash flow is a key reason many choose buy-to-let over other investment types.
- Portfolio diversification: Investing in property can help diversify your investment portfolio, reducing reliance on stocks, shares, or other asset classes. This can help spread risk and potentially improve overall returns.
- Greater control: Unlike some investments, buy-to-let gives you direct control over your asset. You can choose the location, type of property, and how it’s managed, tailoring your investment to your goals.
- Tax advantages: Although tax rules have tightened in recent years, there are still allowances and reliefs available to landlords, such as deductions for certain expenses related to property maintenance and letting. With that in mind, there have been changes to the reporting of tax for buy-to-let properties from April of this year with the introduction of Making Tax Digital.
Where should I invest in buy-to-let properties?
The areas that are bringing in the highest yield are in the north of England; the North East at 9.6%, North West at 8.3% and Yorkshire and the Humber standing at 8.2% - all well above the national average.*
However, that is not to say the South isn’t bringing in significant value with strong yields of over 6% and London standing at just under 5.9%, with continued demand in areas with higher affordability thresholds.*
How does tax and stamp duty differ for landlords?
UK Stamp Duty Land Tax (SDLT) stand at a higher rate for additional residential properties, with the thresholds as below (excluding Scotland)**:
- 5% on the portion up to £250,000
- 10% on the portion between £250,000 and £925,000
- 15% on the portion between £925,000 and £1.5 million
- 17% on the portion above £1.5 million
A 2% surcharge may apply if you are not a UK resident and are buying a residential property in England or Northern Ireland.
Land and Buildings Transaction Tax (LBTT) is the additional property supplement rates that stand in Scotland, with the thresholds as below^:
- 8% on the portion up to £145,000
- 10% on the portion between £145,000 and £250,000
- 13% on the portion between £250,000 and £325,000
- 18% on the portion between £325,000 and £750,000
- 20% on the portion above £750,000
Both SDLT and LBTT are progressive taxes, meaning you only pay the higher rate on the portion of the price within the band, not on the entire purchase.
Note: The above rates are for additional properties or companies purchasing a property to be used in a rental business. Standard rates may apply if buying your only residential property personally.
Are there benefits to using a letting agent to manage my property?
Regulations are a huge factor to consider, particularly in light of the Renter’s Rights Act in England, as well as legislation across Scotland and Wales brings new compliance to follow that can be complex. You need to keep safe and legal, one of the best ways to ensure this is by using an expert letting agent.
As an example, you also need to conduct electrical safety checks every five years and gas safety checks annually, but having an agent handle these intricacies can be very beneficial. It gives you peace of mind, frees up your time and avoids any nasty surprises that could set you back in the long run.
Should landlords set up a limited company for a buy-to-let?
One of the big questions landlords are asking themselves is whether to purchase a buy‑to‑let through a limited company. There are various costs and other implications to consider, including how rental income is taxed.
Here are some of the main tax differences:
- Income tax on rental income: Personal ownership
The tax you pay depends on your overall personal income. In 2026, the tax rates range from 20% to 45% in England, Wales and Northern Ireland, while in Scotland the rates range from 19% to 48%. The government has announced that from April 2027, separate Income Tax rates for property income will apply in England, Wales and Northern Ireland, increasing the basic, higher and additional rates to 22%, 42% and 47%.
- Corporation tax and dividends: Company ownership
Corporation Tax range between 19% and 25% depending on company total profits. If profits are later taken out of the company, further tax may arise through dividends, which in 2026 are taxed at 10.75% for basic rate taxpayer, 35.75% for higher or 39.35% for additional.
- Mortgage interest and finance costs
If you own property personally, tax relief for finance costs is available but restricted to the basic income tax rate. Companies can generally deduct finance costs when calculating taxable profits.
There are many pros and cons to setting up a limited company, and we recommend you speak to a tax expert before making any decision.
So, is buy-to-let worth it in 2026?
No investment is without risk, but if you take a long-term view of it, buy-to-let can work for you. It’s not a get-rich-quick scheme, but money can be made if you go in with your eyes open.
One of the first things you need to ensure is that you’re getting the right price for your rental property. Your best bet is booking a valuation with one of our lettings experts, who can give you an idea of rental income. They can also answer any questions and give you ideas on how to increase your yield.
Alternatively, grab a quick 60-second valuation now. You can do this on a property you currently own or on a property you’re thinking of turning into a buy-to-let. It will give you a good idea of what you could be earning in rental income.
